U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-KSB

[X]  Annual report under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934

     For the fiscal year ended December 31, 2000

[_]  Transition report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934

     For the transition period from _______________ to ________________


Commission file number: 0-25923

                           CommerceFirst Bancorp, Inc.
                 (Name of Small Business Issuer in its Charter)


             Maryland                                    52-2180744
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)


                      1804 West Street, Annapolis MD 21401
               (Address of Principal Executive Offices) (Zip Code)

Issuer's Telephone Number:  410-280-6695

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act:
Common Stock $.01 par value

Check whether the Issuer;  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant  was required to file such reports;  and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X]  No [_]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

The  issuer's  revenues  for the  fiscal  year  ended  December  31,  2000  were
approximately $459,000.

The aggregate market value of the outstanding Common Stock held by nonaffiliates
as of March 13, 2001 was approximately $3,318,500.

As of March 13, 2001,  the number of  outstanding  shares of the Common Stock, $
 .01 par value, of CommerceFirst Bancorp, Inc. was 822,250.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         CommerceFirst  Bancorp, Inc. (the "Company") was incorporated under the
laws of the State of  Maryland  on July 9,  1999,  to serve as the bank  holding
company for a newly formed Maryland  chartered  commercial bank. The Company was
formed by a group of local businessmen and professionals  with significant prior
experience in community  banking in the Company's market area,  together with an
experienced   community  bank  senior   management   team.  The  Company's  sole
subsidiary,  CommerceFirst Bank (the "Bank"),  a Maryland  chartered  commercial
bank and member of the Federal Reserve System,  commenced banking  operations on
June 29, 2000. The Bank operates from one office in Annapolis, Maryland.

         The Bank operates as a community bank alternative to the  superregional
financial institutions that dominate its primary market area. The cornerstone of
the  Bank's  philosophy  is to  provide  superior,  personalized  service to its
customers.  The Bank focuses on  relationship  banking,  providing each customer
with a number of services,  familiarizing itself with, and addressing itself to,
customer needs in a proactive, personalized fashion.

         In August 2000, the Company completed its initial offering of shares of
its common  stock,  $.01 par value  ("Common  Stock"),  with the sale of 822,250
shares of Common  Stock at a price of $10.00 per share,  for total  proceeds  of
$8,222,500. After expenses of the offering, the Company received net proceeds of
$8,107,234.  The Company  initially  capitalized the Bank with $6,500,000 of the
proceeds of the offering.

         Description  of  Services.  The Bank  offers  full  commercial  banking
services to its business and professional clients. The Bank emphasizes providing
commercial  banking  services to sole  proprietorships,  small and  medium-sized
businesses,   partnerships,    corporations,    non-profit   organizations   and
associations,  and investors  living and working in and near the Bank's  primary
service area.  Limited  retail banking  services are offered to accommodate  the
individual  needs of both corporate  customers as well as the community the Bank
serves.

         The  Bank  is  developing  a loan  portfolio  consisting  primarily  of
business loans with variable rates and/or short  maturities  where the cash flow
of the  borrower  is the  principal  source  of debt  service  with a  secondary
emphasis on  collateral.  Real estate loans are made  generally  for  commercial
purposes  and are  structured  using fixed  rates which  adjust in three to five
years, with maturities of five to ten years.

         In general, the Bank offers the following credit services:

         1)       Commercial  loans  for  business  purposes  including  working
                  capital,  equipment  purchases,  real estate, lines of credit,
                  and  government  contract  financing.  Asset based lending and
                  accounts  receivable  financing  are  available on a selective
                  basis.

         2)       Real estate loans for business and investment purposes.

         3)       Commercial lines of credit.

         4)       Merchant  credit card services are offered  through an outside
                  vendor.

         The direct  lending  activities  in which the Bank engages each carries
the risk that the borrowers will be unable to perform on their  obligations.  As
such,  interest rate policies of the Federal Reserve Board and general  economic
conditions,  nationally and in the Bank's primary market area have a significant
impact on the Bank's and the Company's results of operations. To the extent that
economic conditions  deteriorate,  business and individual borrowers may be less
able to  meet  their  obligations  to the  Bank in  full,  in a  timely  manner,
resulting  in decreased  earnings or losses to the Bank.  To the extent the Bank
makes fixed rate loans,  general increases in interest rates will tend to reduce
the Bank's spread as the interest rates the Bank must pay for deposits  increase
while interest income is flat.  Economic  conditions and interest rates may also
adversely affect the value of property pledged as security for loans.



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<PAGE>

         Deposit services include business and personal checking  accounts,  NOW
accounts,  and a tiered  savings/Money  Market  Account  basing  the  payment of
interest on balances on deposit.  Certificates  of Deposits are offered  using a
tiered  rate  structure  and  various  maturities.  The  acceptance  of brokered
deposits is not a part of the current strategy.

         Other services for business  accounts include cash management  services
such as sweep accounts,  repurchase  agreements and credit card  depository.  An
after hours depository is also available.

         Source of Business.  Management believes that the market segments which
the Bank targets,  small to medium sized businesses and the professional base of
the Bank's  market area,  demand the  convenience  and  personal  service that a
smaller,  independent  financial  institution  such as the Bank can offer. It is
these themes of  convenience  and  personal  service that form the basis for the
Bank's  business  development  strategies.  The Bank provides  services from its
strategically located main office in Annapolis, Maryland which it believes meets
the needs of the Bank's existing and potential customers,  and provide prospects
for additional growth and expansion.  Subject to obtaining necessary  regulatory
approvals,  capital  adequacy,  the  identification  of appropriate  sites, then
current  business  demand and other  factors,  the Company plans for the Bank to
consider establishment of additional branch offices at some point in the future.
There can be no assurance that the Bank will  establish any additional  branches
or that they will be profitable.

         The Bank has  capitalized  upon the  extensive  business  and  personal
contacts and relationships of its Directors and Executive  Officers to establish
the Bank's  initial  customer  base.  To  introduce  new  customers to the Bank,
reliance  is  placed  on  aggressive  officer-originated  calling  programs  and
director, customer and shareholder referrals.

         The risk of  nonpayment  (or deferred  payment) of loans is inherent in
commercial  banking.  The  Bank's  marketing  focus  on  small  to  medium-sized
businesses  may result in the  assumption  by the Bank of certain  lending risks
that are different from those attendant to loans to larger companies. Management
of the Bank carefully  evaluates all loan  applications and attempts to minimize
its credit risk  exposure  by use of thorough  loan  application,  approval  and
monitoring  procedures;  however, there can be no assurance that such procedures
can significantly reduce such lending risks.

EMPLOYEES

         At December 31, 2000 the Bank employed 12 persons on a full time basis,
two of whom as senior  officers.  The  Chairman  of the Board,  an  attorney  in
private practice,  devotes  approximately 40 hours a month to the advancement of
the Bank,  principally  in  business  development  activities.  The  Company (as
distinguished from the Bank) does not have any employees or officers who are not
employees or officers of the Bank. None of the Bank's  employees are represented
by any  collective  bargaining  group,  and the Bank  believes that its employee
relations are good. The Bank provides a benefit program that includes health and
dental insurance,  a 401k plan, and life and long-term  disability insurance for
substantially all full time employees.

MARKET AREA AND COMPETITION

         Location and Market Area.  The Bank's main office and the  headquarters
of the Company and the Bank are located at 1804 West Street, Annapolis, Maryland
21401.

         The primary service area of the Bank is Anne Arundel County,  Maryland,
with secondary efforts directed toward the  Baltimore/Washington  vicinity.  The
entire area  attracts a  substantial  business  community as well as fostering a
variety  of  support  industries  such  as  attorneys,   lobbyists,   government
contractors,  real estate  developers and investors,  non-profit  organizations,
tourism and consultants.

         Anne Arundel County, with a total population of about 485,000, has over
12,000 business establishments providing about 255,000 jobs, and an unemployment
rate  below the  national  average.  Vibrant  commercial  development,  with the
attendant strong job growth, characterizes the Bank's primary marketing area.



                                       3
<PAGE>

         Competition. Deregulation of financial institutions and holding company
acquisitions of banks across state lines has resulted in widespread, fundamental
changes  in the  financial  services  industry.  This  transformation,  although
occurring    nationwide,    is    particularly    intense    in   the    greater
Baltimore/Washington,  D.C.  metropolitan  area  because  of the  changes in the
area's  economic  base in  recent  years and  changing  state  laws  authorizing
interstate  mergers and acquisitions of banks, and the interstate  establishment
or acquisition of branches.

         In Anne Arundel County,  Maryland,  competition is  exceptionally  keen
from large banking institutions  headquartered outside of Maryland. In addition,
the Bank competes with other  community  banks,  savings and loan  associations,
credit  unions,  mortgage  companies,  finance  companies  and others  providing
financial  services.  Among the advantages that many of these  institutions have
over the Bank are their abilities to finance  extensive  advertising  campaigns,
maintain extensive branch networks and technology  investments,  and to directly
offer certain services, such as international banking and trust services,  which
are not offered directly by the Bank. Further, the greater capitalization of the
larger  institutions  allows for  substantially  higher  lending limits than the
Bank. Certain of these competitors have other advantages,  such as tax exemption
in the case of credit  unions,  and lesser  regulation  in the case of  mortgage
companies and finance companies.

REGULATION

         The  following  summaries of statutes and  regulations  affecting  bank
holding  companies do not purport to be complete  discussions  of all aspects of
such statutes and  regulations  and are qualified in their entirety by reference
to the full text thereof.

         The Company. The Company is a bank holding company registered under the
Bank  Holding  Company Act of 1956,  as  amended,  (the "Act") and is subject to
supervision by the Federal Reserve Board. As a bank holding company, the Company
is  required to file with the Federal  Reserve  Board an annual  report and such
other  additional  information as the Federal Reserve Board may require pursuant
to the Act. The Federal Reserve Board may also make  examinations of the Company
and each of its subsidiaries.

         The Act requires approval of the Federal Reserve Board for, among other
things,  the  acquisition by a proposed bank holding  company of control of more
than five percent (5%) of the voting shares, or substantially all the assets, of
any bank or the merger or  consolidation  by a bank holding company with another
bank holding company.  The Act also generally  permits the acquisition by a bank
holding company of control or  substantially  all the assets of any bank located
in a state other than the home state of the bank holding  company,  except where
the bank has not been in existence  for the minimum  period of time  required by
state law,  but if the bank is at least 5 years old, the Federal  Reserve  Board
may approve the acquisition.

         With certain limited  exceptions,  a bank holding company is prohibited
from  acquiring  control of any voting shares of any company which is not a bank
or bank holding company and from engaging directly or indirectly in any activity
other than banking or managing or controlling banks or furnishing services to or
performing service for its authorized subsidiaries.  A bank holding company may,
however,  engage in or  acquire  an  interest  in, a  company  that  engages  in
activities which the Federal Reserve Board has determined by order or regulation
to be so closely  related to banking or managing or  controlling  banks as to be
properly incident thereto.  In making such a determination,  the Federal Reserve
Board is required to consider  whether the  performance  of such  activities can
reasonably be expected to produce  benefits to the public,  such as convenience,
increased  competition or gains in efficiency,  which outweigh  possible adverse
effects,  such  as  undue  concentration  of  resources,   decreased  or  unfair
competition,  conflicts of interest or unsound  banking  practices.  The Federal
Reserve Board is also empowered to differentiate between activities commenced de
novo and  activities  commenced by the  acquisition,  in whole or in part,  of a
going  concern.  Some of the  activities  that the  Federal  Reserve  Board  has
determined  by  regulation to be closely  related to banking  include  making or
servicing  loans,  performing  certain  data  processing  services,  acting as a
fiduciary  or  investment  or  financial  advisor,  and  making  investments  in
corporations or projects designed primarily to promote community welfare.

         Subsidiary  banks of a bank  holding  company  are  subject  to certain
restrictions  imposed by the Federal  Reserve Act on any extensions of credit to
the bank holding company or any of its subsidiaries, or investments in the stock
or other  securities  thereof,  and on the taking of such stock or securities as
collateral  for  loans to any  borrower.  Further,  a  holding  company  and any
subsidiary bank are prohibited  from engaging in certain tie-in  arrangements in
connection



                                       4
<PAGE>

with the extension of credit. A subsidiary bank may not extend credit,  lease or
sell property, or furnish any services, or fix or vary the consideration for any
of the foregoing on the condition  that: (i) the customer obtain or provide some
additional credit,  property or services from or to such bank other than a loan,
discount,  deposit or trust  service;  (ii) the customer  obtain or provide some
additional  credit,  property  or  service  from or to the  Company or any other
subsidiary  of the Company;  or (iii) the customer not obtain some other credit,
property or service from  competitors,  except for  reasonable  requirements  to
assure the soundness of credit extended.

         Effective on March 11, 2000,  the Gramm  Leach-Bliley  Act of 1999 (the
"GLB Act") allows a bank holding company or other company to certify status as a
financial  holding  company,  which allows such company to engage in  activities
that are financial in nature,  that are  incidental to such  activities,  or are
complementary to such activities. The GLB Act enumerates certain activities that
are deemed financial in nature,  such as underwriting  insurance or acting as an
insurance principal, agent or broker, underwriting, dealing in or making markets
in securities,  and engaging in merchant banking under certain restrictions.  It
also  authorizes the Federal Reserve Board to determine by regulation what other
activities are financial in nature, or incidental or complementary  thereto. The
GLB Act allows a wider array of  companies  to own banks,  which could result in
companies with resources  substantially in excess of the Company's entering into
competition with the Company and the Bank.

         The Bank. The Bank, as a Maryland chartered  commercial bank which is a
member of the Federal  Reserve System (a "state member bank") and whose accounts
will be insured by the Bank  Insurance  Fund of the  Federal  Deposit  Insurance
Corporation  (the "FDIC") up to the maximum legal limits of the FDIC, is subject
to regulation, supervision and regular examination by the Maryland Department of
Financial  Institutions  and the Federal Reserve Board. The regulations of these
various agencies govern most aspects of the Bank's business,  including required
reserves  against  deposits,  loans,  investments,   mergers  and  acquisitions,
borrowing,  dividends  and location and number of branch  offices.  The laws and
regulations  governing  the Bank  generally  have been  promulgated  to  protect
depositors  and  the  deposit  insurance  funds,  and not  for  the  purpose  of
protecting stockholders.

         Competition among commercial banks, savings and loan associations,  and
credit  unions has increased  following  enactment of  legislation  that greatly
expanded the ability of banks and bank holding companies to engage in interstate
banking or acquisition activities. As a result of federal and state legislation,
banks in the  Washington  D.C./Maryland/Virginia  area can,  subject  to limited
restrictions,  acquire or merge with a bank in another of the jurisdictions, and
can branch de novo in any of the  jurisdictions.  Additionally,  legislation has
been proposed which may result in non-banking  companies being authorized to own
banks, which could result in companies with resources substantially in excess of
the Company's entering into competition with the Company and the Bank.

         Banking is a business that depends on interest rate  differentials.  In
general, the differences between the interest paid by a bank on its deposits and
its other  borrowings  and the interest  received by a bank on loans extended to
its customers and  securities  held in its investment  portfolio  constitute the
major portion of the bank's earnings.  Thus, the earnings and growth of the Bank
will be subject to the influence of economic conditions generally, both domestic
and foreign,  and also to the monetary and fiscal  policies of the United States
and its agencies,  particularly  the Federal Reserve Board,  which regulates the
supply of money through  various means  including open market dealings in United
States government securities.  The nature and timing of changes in such policies
and their impact on the Bank cannot be predicted.

         Branching and  Interstate  Banking.  The federal  banking  agencies are
authorized to approve  interstate  bank merger  transactions  without  regard to
whether such transaction is prohibited by the law of any state,  unless the home
state of one of the banks has opted out of the interstate bank merger provisions
of the  Riegle-Neal  Interstate  Banking and  Branching  Efficiency  Act of 1994
(the"Riegle-Neal  Act") by  adopting  a law after the date of  enactment  of the
Riegle-Neal  Act  and  prior  to June  1,  1997  which  applies  equally  to all
out-of-state  banks  and  expressly  prohibits  merger  transactions   involving
out-of-state  banks.  Interstate  acquisitions of branches are permitted only if
the law of the state in which the branch is located  permits such  acquisitions.
Such  interstate  bank mergers and branch  acquisitions  are also subject to the
nationwide and statewide insured deposit concentration  limitations described in
the Riegle-Neal Act.

         The Riegle-Neal Act authorizes the federal banking  agencies to approve
interstate  branching  de novo by  national  and  state  banks  in  states  that
specifically  allow for such branching.  The District of Columbia,  Maryland and


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<PAGE>

Virginia have all enacted laws that permit interstate  acquisitions of banks and
bank branches and permit out-of-state banks to establish de novo branches.

         The GLB Act made  substantial  changes in the historic  restrictions on
non-bank activities of bank holding companies,  and allows affiliations  between
types of  companies  that were  previously  prohibited.  The GLB Act also allows
banks to engage in a wider array of non-banking  activities  through  "financial
subsidiaries."

         Capital  Adequacy  Guidelines.  The Federal  Reserve Board and the FDIC
have  adopted  risk based  capital  adequacy  guidelines  pursuant to which they
assess the  adequacy  of capital in  examining  and  supervising  banks and bank
holding  companies and in analyzing  bank  regulatory  applications.  Risk-based
capital  requirements  determine  the  adequacy  of  capital  based  on the risk
inherent in various classes of assets and off-balance sheet items.

         State  member  banks  are  expected  to meet a  minimum  ratio of total
qualifying  capital (the sum of core capital (Tier 1) and supplementary  capital
(Tier 2) to risk weighted assets of 8%. At least half of this amount (4%) should
be in the form of core capital.  These  requirements  apply to the Bank and will
apply to the  Company  (a bank  holding  company)  once its total  assets  equal
$150,000,000  or more, it engages in certain highly  leveraged  activities or it
has publicly held debt securities.

         Tier 1 Capital  generally  consists of the sum of common  stockholders'
equity  and  perpetual  preferred  stock  (subject  in the case of the latter to
limitations on the kind and amount of such stock which may be included as Tier 1
Capital),  less goodwill,  without adjustment for changes in the market value of
securities classified as "available for sale" in accordance with FAS 115. Tier 2
Capital  consists  of  the  following:  hybrid  capital  instruments;  perpetual
preferred  stock  which  is not  otherwise  eligible  to be  included  as Tier 1
Capital;  term  subordinated  debt and  intermediate-term  preferred stock; and,
subject to limitations,  general allowances for loan losses. Assets are adjusted
under  the   risk-based   guidelines  to  take  into  account   different   risk
characteristics,  with the  categories  ranging from 0% (requiring no risk-based
capital)  for  assets  such as cash,  to 100% for the bulk of  assets  which are
typically  held  by a  bank  holding  company,  including  certain  multi-family
residential  and  commercial  real estate loans,  commercial  business loans and
consumer  loans.  Residential  first  mortgage  loans  on  one  to  four  family
residential  real  estate and certain  seasoned  multi-family  residential  real
estate loans, which are not 90 days or more past-due or non-performing and which
have been made in accordance with prudent underwriting standards, are assigned a
50%  level  in  the  risk-weighing  system,  as  are  certain   privately-issued
mortgage-backed  securities  representing  indirect  ownership  of  such  loans.
Off-balance  sheet items also are  adjusted to take into  account  certain  risk
characteristics.

         In addition to the risk-based capital requirements, the Federal Reserve
Board has  established a minimum 3.0% Leverage  Capital Ratio (Tier 1 Capital to
total adjusted  assets)  requirement for the most  highly-rated  banks,  with an
additional  cushion  of at least 100 to 200 basis  points  for all other  banks,
which  effectively  increases the minimum  Leverage Capital Ratio for such other
banks to 4.0% - 5.0% or more.  The  highest-rated  banks are those  that are not
anticipating or experiencing  significant growth and have well diversified risk,
including no undue interest rate risk exposure,  excellent  asset quality,  high
liquidity,  good earnings and, in general,  those which are  considered a strong
banking organization. A bank having less than the minimum Leverage Capital Ratio
requirement  shall,  within  60 days of the date as of which it fails to  comply
with such requirement,  submit a reasonable plan describing the means and timing
by which the bank shall achieve its minimum Leverage Capital Ratio  requirement.
A bank which fails to file such plan is deemed to be  operating in an unsafe and
unsound  manner,  and could subject the bank to a  cease-and-desist  order.  Any
insured  depository  institution with a Leverage Capital Ratio that is less than
2.0% is deemed to be  operating  in an unsafe or unsound  condition  pursuant to
Section 8(a) of the Federal Deposit Insurance Act (the "FDIA") and is subject to
potential  termination of deposit insurance.  However,  such an institution will
not be subject to an  enforcement  proceeding  solely on account of its  capital
ratios,  if it has entered into and is in compliance with a written agreement to
increase  its  Leverage  Capital  Ratio and to take such other  action as may be
necessary for the  institution  to be operated in a safe and sound  manner.  The
capital  regulations  also provide,  among other  things,  for the issuance of a
capital  directive,  which  is a final  order  issued  to a bank  that  fails to
maintain  minimum  capital or to restore  its  capital  to the  minimum  capital
requirement within a specified time period. Such directive is enforceable in the
same manner as a final cease-and-desist order.

         Prompt  Corrective  Action.  Under Section 38 of the FDIA, each federal
banking agency is required to



                                       6
<PAGE>

implement  a  system  of  prompt  corrective  action  for  institutions  that it
regulates.  The federal banking agencies have promulgated  substantially similar
regulations to implement the system of prompt corrective  action  established by
Section 38 of the FDIA. Under the regulations, a bank shall be deemed to be: (i)
"well  capitalized" if it has a Total Risk Based Capital Ratio of 10.0% or more,
a Tier 1 Risk Based Capital  Ratio of 6.0% or more, a Leverage  Capital Ratio of
5.0% or more and is not subject to any written capital order or directive;  (ii)
"adequately  capitalized"  if it has a Total Risk Based Capital Ratio of 8.0% or
more,  a Tier 1 Risk Based  Capital  Ratio of 4.0% or more and a Tier 1 Leverage
Capital  Ratio of 4.0% or more (3.0% under certain  circumstances)  and does not
meet the definition of "well capitalized";  (iii) "undercapitalized" if it has a
Total Risk  Based  Capital  Ratio  that is less than  8.0%,  a Tier 1 Risk based
Capital  Ratio that is less than 4.0% or a Leverage  Capital  Ratio that is less
than   4.0%   (3.0%   under   certain   circumstances);    (iv)   "significantly
undercapitalized"  if it has a Total Risk Based  Capital Ratio that is less than
6.0%,  a Tier 1 Risk  Based  Capital  Ratio that is less than 3.0% or a Leverage
Capital Ratio that is less than 3.0%; and (v) "critically  undercapitalized"  if
it has a ratio of tangible  equity to total assets that is equal to or less than
2.0%.

         An institution  generally must file a written capital  restoration plan
which meets specified  requirements  with an appropriate  federal banking agency
within 45 days of the date the institution  receives notice or is deemed to have
notice that it is undercapitalized, significantly undercapitalized or critically
undercapitalized.  A federal  banking agency must provide the  institution  with
written  notice of  approval  or  disapproval  within 60 days after  receiving a
capital restoration plan, subject to extensions by the applicable agency.

         An institution  that is required to submit a capital  restoration  plan
must  concurrently  submit a performance  guaranty by each company that controls
the  institution.  Such guaranty shall be limited to the lesser of (i) an amount
equal to 5.0% of the institution's  total assets at the time the institution was
notified  or  deemed to have  notice  that it was  undercapitalized  or (ii) the
amount  necessary at such time to restore the relevant  capital  measures of the
institution  to the levels  required for the  institution  to be  classified  as
adequately  capitalized.  Such a guaranty shall expire after the federal banking
agency notifies the institution that it has remained adequately  capitalized for
each of four consecutive calendar quarters. An institution which fails to submit
a written capital  restoration plan within the requisite  period,  including any
required performance  guaranty,  or fails in any material respect to implement a
capital  restoration plan, shall be subject to the restrictions in Section 38 of
the FDIA which are applicable to significantly undercapitalized institutions.

         A  "critically  undercapitalized   institution"  is  to  be  placed  in
conservatorship  or  receivership  within  90  days  unless  the  FDIC  formally
determines  that  forbearance  from such action would better protect the deposit
insurance fund. Unless the FDIC or other appropriate  federal banking regulatory
agency makes specific  further  findings and certifies  that the  institution is
viable and is not  expected to fail,  an  institution  that  remains  critically
undercapitalized on average during the fourth calendar quarter after the date it
becomes critically undercapitalized must be placed in receivership.  The general
rule is that the FDIC will be appointed as receiver  within 90 days after a bank
becomes critically undercapitalized unless extremely good cause is shown and the
federal regulators agree to an extension.  In general,  good cause is defined as
capital that has been raised and is  imminently  available for infusion into the
Bank except for certain technical requirements that may delay the infusion for a
period of time beyond the 90 day time period.

         Immediately upon becoming undercapitalized, an institution shall become
subject to the provisions of Section 38 of the FDIA,  which (i) restrict payment
of capital  distributions and management fees; (ii) require that the appropriate
federal  banking agency monitor the condition of the institution and its efforts
to restore its capital;  (iii) require submission of a capital restoration plan;
(iv)  restrict the growth of the  institution's  assets;  and (v) require  prior
approval of certain expansion proposals.  The appropriate federal banking agency
for an  undercapitalized  institution  also may take any number of discretionary
supervisory  actions  if the  agency  determines  that any of these  actions  is
necessary  to resolve the  problems  of the  institution  at the least  possible
long-term  cost to the  deposit  insurance  fund,  subject in  certain  cases to
specified procedures. These discretionary supervisory actions include: requiring
the  institution to raise  additional  capital;  restricting  transactions  with
affiliates;  requiring  divestiture  of  the  institution  or  the  sale  of the
institution to a willing  purchaser;  and any other supervisory  action that the
agency  deems  appropriate.   These  and  additional  mandatory  and  permissive
supervisory actions may be taken with respect to significantly  undercapitalized
and critically undercapitalized institutions.

         Additionally,  under  Section  11(c)(5) of the FDIA, a  conservator  or
receiver may be appointed for an



                                       7
<PAGE>

institution  where: (i) an  institution's  obligations  exceed its assets;  (ii)
there is substantial  dissipation of the  institution's  assets or earnings as a
result of any  violation  of law or any  unsafe or unsound  practice;  (iii) the
institution  is in an  unsafe  or  unsound  condition;  (iv)  there is a willful
violation of a cease-and-desist  order; (v) the institution is unable to pay its
obligations in the ordinary course of business; (vi) losses or threatened losses
deplete all or substantially  all of an institution's  capital,  and there is no
reasonable  prospect of becoming  "adequately  capitalized"  without assistance;
(vii) there is any  violation of law or unsafe or unsound  practice or condition
that is likely  to cause  insolvency  or  substantial  dissipation  of assets or
earnings,  weaken the institution's  condition, or otherwise seriously prejudice
the interests of depositors or the insurance fund; (viii) an institution  ceases
to be insured;  (ix) the institution is  undercapitalized  and has no reasonable
prospect that it will become adequately capitalized,  fails to become adequately
capitalized when required to do so, or fails to submit or materially implement a
capital restoration plan; or (x) the institution is critically  undercapitalized
or otherwise has substantially insufficient capital.

         Regulatory   Enforcement   Authority.   Federal   banking   law  grants
substantial  enforcement powers to federal banking regulators.  This enforcement
authority  includes,  among  other  things,  the  ability to assess  civil money
penalties,   to  issue  cease-and-desist  or  removal  orders  and  to  initiate
injunctive  actions against  banking  organizations  and  institution-affiliated
parties.  In general,  these enforcement actions may be initiated for violations
of laws and  regulations  and  unsafe or  unsound  practices.  Other  actions or
inactions may provide the basis for enforcement action,  including misleading or
untimely reports filed with regulatory authorities.

ITEM 2.  DESCRIPTION OF PROPERTY.

         The main office of the Bank and the  executive  offices of the Bank and
the Company are located at 1804 West Street, Annapolis, Maryland, in a brick and
masonry  structure with ample  parking.  The Company leases 8,100 square feet in
the  building  under a five-year  lease,  which  commenced  in April 2000,  at a
beginning and current annual rent of $153,900, subject to annual increases of 3%
per year. The Company has three five-year renewal options.  Management  believes
adequate insurance coverage is in force.

ITEM 3.  LEGAL PROCEEDINGS.

         In the ordinary course of its business, the Company may become involved
in routine legal proceedings. At December 31, 2000, there were no pending, or to
the knowledge of the Company, threatened, legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the year ended December 31, 2000.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Market for Common Stock and  Dividends.  The Company's  Common Stock is
not traded on any  organized  exchange or on the Nasdaq  National  Market or the
Nasdaq Small Cap Market.  As of December 31,  2000,  three market  makers made a
market in the Common Stock in the over the counter "bulletin board" market under
the symbol "CMFB". The Common Stock has traded only  sporadically.  No assurance
can be given that an active or  established  trading  market will develop in the
foreseeable  future.  The following table sets forth the high and low bid prices
for the Common Stock during each  calendar  quarter  since the third  quarter of
2000,  during  which  the  Company's  initial  public  offering  of  shares  was
completed.  These quotations reflect interdealer prices,  without retail markup,
markdown  or  commission,  and  may not  represent  actual  transactions.  These
quotations  do not  necessarily  reflect the  intrinsic or market  values of the
Common Stock.

  Period                      Low Bid                   High Bid
  ------------------------    ----------------------    --------------------
  Third Quarter 2000          $8.50                     $10.50
  Fourth Quarter 2000         $7.00                     $10.00



                                       8
<PAGE>

         As of December  31,  2000,  there were  822,250  shares of Common Stock
outstanding,  held by approximately  327  shareholders of record.  Additionally,
warrants  to purchase  123,337  shares of common  stock at an exercise  price of
$10.00  per  share,  are to be  issued  to the  organizers  of  the  Company  in
connection  with the  Company's  initial  offering  of  shares.  For  additional
information  regarding the warrants,  see note 11 to the Consolidated  Financial
Statements.

         Dividends.  The Company has not paid any dividends to date. The payment
of dividends  by the Company  will depend  largely upon the ability of the Bank,
its sole operating business, to declare and pay dividends to the Company, as the
principal  source of the  Company's  revenue,  other than  earnings  on retained
proceeds of the Company's  initial  offering of Common Stock,  will initially be
from dividends paid by the Bank. Dividends will depend primarily upon the Bank's
earnings,  financial  condition,  and need for  funds,  as well as  governmental
policies  and  regulations  applicable  to  the  Company  and  the  Bank.  It is
anticipated  that the  Bank  will  incur  losses  during  its  initial  phase of
operations, and therefore, it is not anticipated that any dividends will be paid
by the Bank or the  Company  for at least  three  years  and in the  foreseeable
future.  Even if the Bank and the Company have earnings in an amount  sufficient
to pay  dividends,  the Board of Directors may determine to retain  earnings for
the purpose of funding the growth of the Company and the Bank.

         Regulations of the Federal  Reserve Board and Maryland law place limits
on the  amount  of  dividends  the Bank  may pay to the  Company  without  prior
approval.  Prior  regulatory  approval is required to pay dividends which exceed
the Bank's net profits for the current  year plus its  retained  net profits for
the preceding two calendar years, less required transfers to surplus.  State and
federal bank  regulatory  agencies  also have  authority to prohibit a bank from
paying dividends if such payment is deemed to be an unsafe or unsound  practice,
and the  Federal  Reserve  Board  has  the  same  authority  over  bank  holding
companies.

         The Federal  Reserve Board has  established  guidelines with respect to
the  maintenance  of  appropriate  levels of capital by registered  bank holding
companies.  Compliance with such standards,  as presently in effect,  or as they
may be amended from time to time,  could  possibly limit the amount of dividends
that the Company  may pay in the future.  In 1985,  the  Federal  Reserve  Board
issued a policy  statement  on the  payment of cash  dividends  by bank  holding
companies. In the statement, the Federal Reserve Board expressed its view that a
holding company  experiencing  earnings weaknesses should not pay cash dividends
exceeding its net income,  or which could only be funded in ways that weaken the
holding  company's  financial  health,  such as by  borrowing.  As a  depository
institution, the deposits of which are insured by the FDIC, the Bank may not pay
dividends or distribute any of its capital assets while it remains in default on
any  assessment  due the FDIC. The Bank currently is not in default under any of
its obligations to the FDIC.

         Recent Sales of Unregistered Shares.  Between July 14, 1999 and May 17,
2000,  the  Company  issued  an  aggregate  of 650  shares  of  Common  Stock to
organizers of the Company and the Bank at a price of $1,000 per share in private
placement  transactions  exempted pursuant to Section 4(2) of the Securities Act
of 1933, pursuant to the terms of Organizer Agreements between CommerceFirst and
the organizers.  Each of such organizer shares was used as consideration for the
purchase of 100 shares of common  stock in the  Company's  registered  offering.
None of the organizer shares remains outstanding.

         Use of  Proceeds.  On February  22, 2000,  the  Company's  registration
statement  on Form SB-2 (No.  333-91817)  relating  to its  initial  offering of
common  stock,  $.01 par value,  was declared  effective by the  Securities  and
Exchange Commission, and the offering commenced. On July 22, 2000, the Company's
post-effective  amendment  no. 1 to the  Company's  registration  statement  was
declared effective by the Securities and Exchange  Commission,  and the offering
was extended to August 18, 2000.  On June 29,  2000,  subscriptions  for 648,450
shares (not  including  65,000  shares  purchased by  organizers in exchange for
organizer shares  previously  issued for an aggregate of $650,000) were accepted
and a closing was held with respect to those  shares,  resulting in net proceeds
of  $6,484,500.  On August  18,  2000,  escrow  was  broken  with  respect to an
additional  99,150  shares,  for additional  gross  proceeds of $991,150.  Total
proceeds of the offering,  including organizer share purchases, were $8,222,250.
No person or entity  underwrote the Company's  offering,  which was made through
the efforts of the Company's organizing  directors and executive officers,  with
the limited assistance of Koonce  Securities,  Inc., in order to comply with the
securities  laws of  certain of the  states in which the  shares  were  offered.
Koonce  receive  a fee of  $15,000  for its  services  in  connection  with  the
offering, and reimbursement of $1,026 for deposit delivery services.



                                       9
<PAGE>

A total of  $6,500,000  has been  contributed  through  December 31, 2000 to the
capital  of the  Bank  for use in its  lending  and  investment  activities.  An
aggregate of $452,354 has been expended by the Bank in renovation  and equipping
of its main  office.  The  remaining  proceeds of the  offering  retained by the
Company are held in temporary investments.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

         This  discussion  and  analysis  provides an overview of the  financial
condition  and  results  of  operations  of  CommerceFirst  Bancorp,  Inc.  (the
"Company")  and  CommerceFirst  Bank (the "Bank") for the year 2000. The Company
was formed on July 9, 1999;  the Bank opened for business on June 29,  2000.  In
general,  comparative discussion of the results of operations for the year ended
December 31, 1999 and December 31, 2000 is not  provided,  as the Company had no
operations other than organizational  activity in 1999, and as such, comparisons
do not provide  accurate  or  meaningful  information  regarding  the  Company's
financial position or results of operations.

         Forward Looking  Statements.  This discussion  contains forward looking
statements  within  the  meaning  of the  Securities  Exchange  Act of 1934,  as
amended,  including  statements of goals,  intentions,  and  expectations  as to
future trends,  plans,  events or results of Company operations and policies and
regarding general economic  conditions.  These statements are based upon current
and anticipated  economic  conditions,  nationally and in the Company's  market,
interest  rates  and  interest  rate  policy,   competitive  factors  and  other
conditions that, by their nature, are not susceptible to accurate forecast,  and
are subject to significant  uncertainty.  Because of these uncertainties and the
assumptions  on which this  discussion  and the  forward-looking  statements are
based,  actual future operations and results in the future may differ materially
from those  indicated  herein.  Readers  are  cautioned  against  placing  undue
reliance on any such forward-looking  statements. The Company does not undertake
to update any  forward-looking  statements to reflect occurrences or events that
may not have been anticipated as of the date of such statements.

         It is intended  that this  discussion  and analysis help the readers in
their analysis of the accompanying consolidated financial statements.

GENERAL

         CommerceFirst   Bancorp,   Inc.  was  incorporated  under  the  general
corporation  laws of the State of Maryland on July 9, 1999, and is headquartered
in Annapolis,  Maryland.  The Company was formed to be the bank holding  company
for the Bank.

         On June 29, 2000, having received the required approvals from the State
of Maryland and Federal  Reserve System and been accepted for deposit  insurance
by the FDIC, CommerceFirst Bank opened its first office in Annapolis,  Maryland.
On that date the Company became a bank holding company by capitalizing  the Bank
with $6.5 million.  The Bank's main office also serves as the  headquarters  for
the Company.

         On August 18, 2000 the Company completed its initial offering of shares
of the Company's common stock, having received subscriptions for 822,250 shares.
Gross proceeds of the offering amounted to $8.2 million.

         CommerceFirst  Bank was formed to serve the business  community of Anne
Arundel County,  Maryland,  and contiguous  areas.  The  accompanying  financial
information  shows total  assets of the  Company  stood at nearly $20 million at
year-end, after only six full months of operation.

RESULTS OF OPERATIONS

Overview

         The Company reported a net loss of $887,851 for the year ended December
31, 2000. A loss of $242,167 was incurred during the developmental  stage, which
encompassed the first half of the year, and is primarily



                                       10
<PAGE>

attributable to start-up costs of the Company associated with filing fees, legal
fees,  salaries,  rents and other  related  expenses  necessary  to complete the
offering,  file all Federal and state  regulatory  applications  and prepare the
Bank for  business.  During the last six months of the year when the Company was
no longer considered in the developmental  stage, it incurred expenses in excess
of income of $645,684 as it geared up its operation to do business. These losses
are expected to be reduced in the future as the Bank  increases its deposit base
and  generates   additional  loan  volume.  The  Company  had  a  total  deficit
accumulated during the developmental stage period (July 9, 1999 through June 30,
2000) of $432,547.

         The Bank ended the year with  deposits at $12.6  million,  in line with
expectations,  but loan closings and funding did not  materialize  as quickly as
anticipated.  The Bank generated $6.2 million in loans  outstanding at year-end,
including  $2.7  million in  participation  loans  purchased to achieve a higher
return than available from investment securities. The market is very competitive
and the Bank is committed to maintaining a high quality portfolio that returns a
reasonable  market rate. The Company expects  increased  lending activity as the
Bank's  presence in the market is more widely known.  The lending staff has been
active  in  contacting  new  prospects  and  getting  the  Bank's  name into the
community.  Management  believes  that  this  will  translate  into  growth of a
portfolio of quality loans, although there can be no assurance of this.

         The Bank  plans to  maintain  the  allowance  for  credit  losses at an
adequate  level and ended the year  with an  allowance  of 1.47% of  outstanding
loans.  The Bank  plans to  review  and make  adjustments  as the  portfolio  is
evaluated and economic conditions suggest.

         It  was  expected  that  the  Bank  would  sustain  losses  during  the
development  stage period and not show an operating  profit for any month for at
least twenty-four  months after opening for business.  Earnings from investments
by the Company of capital not invested in the Bank will  slightly  offset losses
of the Bank, as the Company alone is marginally profitable.


                                       11
<PAGE>

Consolidated Average Balances, Yields and Rates

<TABLE>
<CAPTION>
                                                                                          December 31, 2000
                                                                                          -----------------
                (Dollars in thousands)
                                                                          Average                                      Yield/
                                                                          Balance               Interest                Rate
                                                                          -------               --------                ----
<S>                                                                       <C>                    <C>                    <C>
ASSETS
Total loans                                                               $ 1,167                $   119                10.20%
Investment securities                                                         436                     26                 5.96%
Federal funds sold                                                          4,932                    314                 6.37%
                                                                          -------                -------                -----

         TOTAL EARNING ASSETS                                             $ 6,535                $   459                 7.02%
                                                                          -------                -------                -----

Less allowance for credit losses                                              (20)
Cash and due from banks                                                       277
Premises and equipment, net                                                   163
Other assets                                                                   61
                                                                          -------

         TOTAL ASSETS                                                     $ 7,016
                                                                          =======

LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing demand deposits                                          $    30                $     0                 1.00%
Money market deposit accounts                                               1,180                     69                 5.85%
Savings                                                                        21                      1                 2.38%
Certificates of deposit                                                       429                     30                 6.99%
Other borrowed funds                                                            8                      0                 2.50%
                                                                          -------                -------                -----

         TOTAL INTEREST-BEARING
         LIABILITIES                                                      $ 1,668                $   100                 6.00%
                                                                          -------                -------                -----


Non-interest-bearing demand deposits                                      $   322
Other liabilities                                                           1,293
Stockholders' equity                                                        3,733
                                                                          -------

         TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY                                             $ 7,016
                                                                          =======

Net interest income and net yield on
   interest earning assets                                                                       $   359                 5.49%
                                                                                                 =======                =====
</TABLE>

Net Interest Income and Net Interest Margin

         Net interest income is the difference  between income on assets and the
cost of funds supporting those assets.  Earning assets are composed primarily of
loans  and  investments;  interest  bearing  deposits  and  customer  repurchase
agreements and other borrowings make up the cost of funds.  Non-interest bearing
deposits and capital are other components representing funding sources.  Changes
in the volume and mix of assets and funding  sources,  along with the changes in
yields earned and rates paid, determine changes in net interest income.

         The net interest  income in 2000 was $359,615.  The income from earning
assets  reflected  in the  financial  statements  includes  interest  earned  on
subscriptions  held by the Company prior to the issuance of stock and opening of
the Bank.  Following its opening,  the Bank realized strong deposit growth. As a
result,  a substantial  portion of the Bank's income was generated by short-term
investments,  principally in Federal funds sold, at yields  significantly  below
those earned on loans in a mature loan portfolio.

         The distortions in an interest income analysis caused by the high level
of capital with no funding costs and the Company's mix of assets and liabilities
are evident when considering net interest spread and interest  margin.  Interest
spread is the  mathematical  difference  between the average  interest earned on
earning  assets and  interest  paid on interest  bearing  liabilities.  Interest
margin  represents  the net interest  yield on earning  assets and is derived by


                                       12
<PAGE>

dividing net interest income by average earning  assets.  In a mature  financial
institution  the  interest  margin  gives a reader  better  indicators  of asset
earning results when compared to peer groups or industry standards.  Because the
Bank  was  operational  for  only a  little  over six  months  during  2000,  in
conjunction  with the relatively high capital levels,  comparison with peer bank
holding companies is not particularly meaningful.

         Throughout  most of 2000 the Company  and Bank  operated in a stable to
increasing  interest  rate  environment;  however,  since  December  rates  have
declined.  This market  characteristic is expected to continue through 2001. The
Bank  expects  that the shift in assets to  higher  yielding  loans  will have a
positive  impact on earnings.  However,  it is expected that this will also be a
year of strong deposit growth that will make the challenge to deploy these funds
somewhat greater.

Provision for Credit Losses

         The provision for credit losses  represents  the expense  recognized to
fund the allowance for credit losses.  This amount is based on many factors that
reflect management's assessment of the risk in its loan portfolio. Those factors
include  economic  conditions and trends,  the value and adequacy of collateral,
volume and mix of the portfolio,  performance  of the  portfolio,  internal loan
processes and capital adequacy of the Company and the Bank.

         During the first year of operation,  management has elected to maintain
a reserve of 1.47% of outstanding  loans.  Based principally on current economic
conditions,   perceived  asset  quality,   loan-loss  experience  of  comparable
institutions  in the Company's  market area and a strong capital  position,  the
allowance is believed to be adequate.  During 2001, as the  portfolio  grows and
other  determining  factors  become  more  relevant,  management  will  employ a
comprehensive review process to maintain the adequacy of the allowance.

Non-interest Income

         Non-interest  income is exclusively from Bank operations and represents
primarily service charge income and fees on deposit  relationships.  This source
of income,  at $9,931,  was not a significant  factor in 2000;  however,  as the
account base grows and the Bank matures and develops  additional  sources of fee
income   non-interest  income  will  be  a  major  contributor  to  the  overall
profitability of the Company.

Non-interest Expense

         Non-interest  expenses of $1,167,397 are  characterized  principally by
expenses  related to the  organization  of the Company and the Bank,  and by the
normal operating expenses of the Bank during the second half of 2000.

         A  significant  non-interest  expense  item is salaries and benefits at
$643,347.  The  organizers  determined  that it was  necessary to bring  quality
people to the Bank  early and  build a staff for  growth.  This was done and the
staff is characterized by banking  professionals who are experienced,  energetic
and known to the community. Through these people it is expected that the Company
and Bank can realize its goal of building a strong profitable  community bank in
Annapolis and Anne Arundel County, Maryland.

         A breakdown of other  non-interest  expenses is in the income statement
and Note 8 to the Consolidated Financial Statements.

         Non-interest  expense  does not include  legal,  filing,  and  offering
expense  of the  Company  and  filing  and  organization  expense of the Bank or
salaries  during the  Company's  organizational  period,  start up supplies  and
marketing/advertising  expense during that period.  These costs  associated with
raising capital, in the amount of $115,266, have been deducted from the proceeds
of the offering as reflected in stockholders' equity.

Income Taxes

         A valuation  allowance has been established for net deferred tax assets
relating  to all  amounts  other  than  unrealized  gains/losses  on  securities
available  for  sale,  as the Bank has yet to  attain  sustained  profitability.


                                       13
<PAGE>

Operating  losses of  approximately  $854,000  are  available  to offset  future
taxable income through 2019.

ASSET QUALITY

         In its lending activities, the Bank seeks to develop sound credits with
customers  who will grow with the Bank.  There has not been an effort to rapidly
build the  portfolio  and earnings at the  sacrifice of asset  quality.  This is
evidenced by the level of outstanding loans that is below  management's  initial
target. The philosophy of seeking quality credits while possibly forgoing income
opportunities will continue.

         At year end the Bank had no loans delinquent  beyond thirty days and no
loans  which  management  considered  impaired.  It  is  the  Bank's  policy  to
discontinue the accrual of interest when a loan is specifically determined to be
impaired or when principal or interest is delinquent for 90 days or more.  Based
upon current  economic  conditions,  the  composition  of the loan portfolio and
loan-loss experience of comparable institutions in the Company's market area, an
allowance for credit losses has been provided at 1.47% of outstanding  loans. No
part of the allowance has been allocated to any  individual  loan or category of
loans.  During  the  coming  year,  as the  portfolio  grows  and  becomes  more
diversified,  the Bank will  implement  a  comprehensive  evaluation  process to
assess the  allowance.  Based on its  knowledge  of the  portfolio  and  current
economic  conditions,  management  believes  that as of December 31,  2000,  the
allowance is adequate to absorb  reasonably  anticipated  losses. As of December
31,  2000,  there were no loans where  information  known to  management  caused
management  to have  serious  doubts as to the ability of the borrower to comply
with the current repayment terms.

         The  activity  in the  allowance  for  credit  losses  is  shown in the
following schedule:

Allowance for credit losses
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                            2000
                                                                            ----
<S>                                                                         <C>
Balance at beginning of year                                                $ --
Provision for credit losses                                                   90
Loans charged off                                                             --
Recoveries                                                                    --
                                                                            ----
Balance at end of year                                                      $ 90
                                                                            ====
</TABLE>

         Other  earning  assets  of the Bank  include  primarily  U.S.  Treasury
securities  with  maturities  not  exceeding  one year.  Federal funds sold also
represent a significant earning asset. Funds are sold on an unsecured basis only
to highly rated banks.

         The following  table sets forth  information on the  composition of the
loan portfolio by type at December 31, 2000.

<TABLE>
<CAPTION>
(Dollars in thousands)                                             Balance              Percentage of
                                                                                         total Loans
<S>                                                                <C>                     <C>
Commercial: (Demand, term, and lines of credit)                    $ 3,173                  50.97%
Real estate - commercial mortgage                                    3,034                  48.76%
Installment loans to individuals                                        17                    .27%
                                                                   -------                 ------
Gross loans                                                          6,225                 100.00%
Less allowance for credit losses                                       (90)
Less unearned fees                                                      (7)
                                                                   -------
Loans, net                                                         $ 6,128
                                                                   =======
</TABLE>


                                       14
<PAGE>

         The following  table shows the maturities of the loan portfolio and the
sensitivity of loans to interest rate fluctuations at December 31, 2000.

<TABLE>
<CAPTION>
                                                                           One Year or    After One Year    After Five        Total
                                                                               Less     Through Five Years    Years
<S>                                                                           <C>             <C>             <C>             <C>
Commercial: (Demand, term, and lines of credit)                               $2,441          $  732          $    0          $3,173
Real estate - commercial mortgage                                                  0             870           2,165           3,035
Installment loans to individuals                                                   0              17               0              17
                                                                              ------          ------          ------          ------

         Total Loans                                                          $2,441          $1,619          $2,165          $6,225
                                                                              ======          ======          ======          ======

Loans with:
         Fixed Rate                                                           $   36          $1,128          $  486          $1,650
         Variable Rate                                                         3,585             492             498           4,575
                                                                              ------          ------          ------          ------

         Total Loans                                                          $3,621          $1,620          $  984          $6,225
                                                                              ======          ======          ======          ======
</TABLE>

Investment Securities

         At December  31,  2000,  the  carrying  value of the Bank's  investment
securities  portfolio was $1.2 million. The Bank currently classifies its entire
securities  portfolio as available  for sale.  Increases in the  portfolio  will
occur whenever  deposit growth  outpaces loan demand and the forecast for growth
is such that the  investment of excess  liquidity in investment  securities  (as
opposed  to short  term  investments  such as Federal  Funds) is  warranted.  In
general, our investment policy is to acquire direct U.S. Treasury securities and
fully guaranteed U.S. government agency issues with a remaining maturity of four
years or less. As the Bank develops its loan  portfolio it  anticipates  that it
will maintain the average  maturity of the securities  portfolio at two years or
less.  As the  Bank  and  the  loan  portfolio  mature,  we  will  reassess  the
appropriate composition and maturities of the securities portfolio. In addition,
the Bank will purchase  Federal  Reserve stock in accordance with regulation and
expects  to  maintain a small  equity  position  in stock in a banker's  bank to
facilitate loan participations.

         The following table provides  information  regarding the composition of
our investment portfolio at December 31, 2001.

<TABLE>
<CAPTION>
   (Dollars in thousands)
                                                     Balance     Percentage of
                                                               Total Investments
<S>                                                   <C>            <C>
Investments Available For Sale
(at estimated market value):

 US Treasury Securities                               $  990          81.89%
 Federal Reserve Stock                                   182          15.05%
 Corporate Equity                                         37           3.06%
                                                      ------         ------

 Total                                                $1,209         100.00%
                                                      ======         ======
</TABLE>

         The U.S.  Treasury  securities in the investment  portfolio at December
31, 2000 consisted of Treasury Bills due March 1, 2001, having a yield of 6.25%.


LIQUIDITY MANAGEMENT

         Liquidity  is a  measure  of the  Bank's  ability  to meet the  demands
required for the funding of loans and to meet  depositors'  requirements for use
of their funds.  The Bank's  sources of liquidity  are cash  balances,  due from
banks, Federal funds sold and short term securities.  There are other sources of
liquidity  that at this  time  are not  relied  on by the  Bank  but as the Bank
matures those sources may be considered.



                                       15
<PAGE>
         Because  of  the  initial   composition  of  the  Bank's  Statement  of
Condition,  its strong capital base,  excellent deposit growth and moderate loan
growth,  the liquidity  position of the Bank remains strong. At year-end,  under
the Bank's liquidity formula, it had $11.8 million of liquidity representing 64%
of total Bank assets. The continued strong growth in deposits with moderate loan
growth and level or  declining  interest  rates will result in a high  liquidity
position.  While it is  desirable  to be  liquid,  it has the  effect of a lower
interest  margin,  as  funds  are  not  invested  in  loans  but  in  short-term
investments that generally carry a lower yield.

Deposits

         The Bank expects that the principal  sources of funds for the Bank will
be core  deposits,  consisting of demand  deposits,  NOW accounts,  money market
accounts,  savings  accounts and  certificates  of deposit from the local market
areas  surrounding  the  bank's  offices.   The  Bank's  deposit  base  includes
transaction accounts, time and savings accounts and accounts which customers use
for cash management. These accounts provide the Bank with a source of fee income
and a relatively stable source of funds.

         The following  table  reflects the Bank's  deposits by category for the
periods indicated.
<TABLE>
<CAPTION>
                                                              Year ended December 31, 2000
                                                                  (Dollars in thousands)
<S>                                                                      <C>
Non-interest-bearing demand                                              $ 1,154
NOW accounts                                                                 316
Money market deposit accounts                                              6,832
Savings                                                                       46
Certificates of deposit                                                    4,289
                                                                         -------
Total deposits                                                           $12,637
                                                                         =======
</TABLE>

         The following table indicates the amount of the Bank's  certificates of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
2000.
<TABLE>
<CAPTION>
                                                                    December 31, 2000
                                                                    -----------------
                                                                  (Dollars in thousands)
<S>                                                                       <C>
Due in:
     3 months or less                                                     $  201
     Over 3 through 6 months                                                 252
     Over 6 through 12 months                                              2,386
     Over 12 months                                                        1,378
                                                                          ------

     Total                                                                $4,217
                                                                          ======
</TABLE>

INTEREST RATE RISK MANAGEMENT

         Banks and other financial  institutions are dependent upon net interest
income,  the difference  between  interest earned on interest earning assets and
interest  paid  on  interest  bearing  liabilities.  In  typical  interest  rate
environments  net interest  income is  maximized  with longer  maturing,  higher
yielding  assets,   being  funded  by  lower  yielding  short-term  funds.  This
composition  of assets and  liabilities  is  profitable  in stable or  declining
interest rate periods;  when interest rates trend upward there can be an adverse
impact on  interest  income.  The current  interest  rate  environment  displays
indications  of declining  rates.  Management,  however,  has chosen to accept a
degree of rate risk (as shown by the  positive  GAP  position  with  repriceable
assets exceeding repriceable liabilities in the short term) rather than lowering
credit standards to facilitate  acceptance of lesser quality credits with longer
maturities.

         GAP, a measure of the  difference in volume  between  interest  bearing
assets  and  interest  bearing  liabilities,   is  a  means  of  monitoring  the
sensitivity of a financial  institution to changes in interest rates.  The chart
below provides an indicator of the rate  sensitivity of the Company.  A positive
GAP  indicates  the degree to which the  volume of  repriceable  assets  exceeds
repriceable  liabilities in particular time periods.  The Company has a positive

                                       16
<PAGE>

GAP of 27.48% out to three months and a cumulative positive GAP of 23.89% out to
twelve months.

         If interest rates were to decline precipitously, the Company's interest
income and margin may be adversely affected. Management has carefully considered
its  strategy to maximize  interest  income by reviewing  interest  rate levels,
economic indicators and features of some of its assets.  These factors have been
thoroughly  discussed with the Board of Directors and  management  believes that
current strategies are appropriate to current economic and interest rate trends.
The positive GAP is carefully monitored and will be favorably impacted by normal
growth in loan assets.

<TABLE>
<CAPTION>
         (Dollars in thousands)
                                                                  0-3         4-12         1-3         3-5       Over 5
                                                                 Months      Months       Years       Years       Years       Total
                                                                 -------     -------     -------     -------     -------     -------
<S>                                                              <C>           <C>           <C>       <C>         <C>       <C>
Interest-earning assets:
         Federal funds sold                                      $ 9,900                                                     $ 9,900
         Deposit in other financial institution                    1,270                                                       1,270
         Investment securities                                       990                                             219       1,209
         Loans                                                       401       2,041         392       1,227       2,164       6,225
                                                                 -------     -------     -------     -------     -------     -------

           Total interest-earning assets                         $12,561       2,041         392       1,227       2,383     $18,604
                                                                 =======     =======     =======     =======     =======     =======

Interest-bearing liabilities:
         Money market deposit accounts                           $ 6,832                                                     $ 6,832
         NOW accounts                                                316                                                         316
         Savings                                                      46                                                          46
         Certificates of deposit                                     202       2,709       1,226         152                   4,289
         Repurchase agreements                                        52          --          --          --          --          52
                                                                 -------     -------     -------     -------     -------     -------
                  Total interest-bearing liabilities             $ 7,448       2,709       1,226         152          --     $11,535
                                                                 =======     =======     =======     =======     =======     =======

CUMULATIVE GAP                                                   $ 5,113       4,445       3,611       4,686       7,069

CUMULATIVE GAP TO INTEREST-EARNING ASSETS                          27.48%      23.89%      19.41%      25.19%      38.00%
</TABLE>


CAPITAL RESOURCES AND ADEQUACY

         The Company was  successful  in raising $8.2 million in capital to fund
the Bank and  other  activities  consistent  with a bank  holding  company.  The
Company originally provided to the Bank $6.5 million in capital. At December 31,
2000,  the Bank  (exclusive  of the Company) had a total capital ratio of 49.2%,
well above regulatory  guidelines.  The Bank's Tier 1 capital ratio was 48.5% at
December 31, 2000. The regulatory  guideline is an 8% ratio; an institution with
Tier 1 risk based ratio of at least 10% is considered well capitalized.

         The Bank is currently  well  capitalized  and the Company  continues to
have about $1.3 million in additional capital available for future use.

EARNINGS PER SHARE

         Generally  accepted  accounting  principles  require that  earnings per
share be stated based on the average number of shares outstanding. The financial
statements show a loss of $1.82 per share,  which is based on a weighted average
number  of  shares  outstanding  of  487,763.  The  average  number of shares is
computed  for the  entire  year  while the  actual  shares of  822,250  were not
considered  fully issued until August 18, 2000,  the date the Company closed its
offering.  Had the issued number of shares been  outstanding  for the full year,
the loss per share would have been shown at about $1.00.

RETURN ON ASSETS AND EQUITY

         The return on average earning assets for 2000 was (13.59%);  the return
on average  equity for the same  period was  (23.79%);  and the ratio of average
shareholders' equity to average total assets was 53.21%.


                                       17
<PAGE>

ITEM 7. FINANCIAL STATEMENTS.







                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
CommerceFirst Bancorp, Inc. and Subsidiary
Annapolis, Maryland

We have audited the  accompanying  consolidated  balance sheets of CommerceFirst
Bancorp,  Inc. and  subsidiary as of December 31, 2000 and 1999, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows  for the  year  ended  December  31,  2000  and the  period  July 9,  1999
(inception) through December 31, 1999. These consolidated  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
CommerceFirst Bancorp, Inc. and subsidiary as of December 31, 2000 and 1999, and
the results of their operations and their cash flows for the year ended December
31, 2000 and the period July 9,1999  (inception)  through  December  31, 1999 in
conformity with generally accepted accounting principles.


/s/ Trice Geary & Myers LLC


Salisbury, Maryland
January 12, 2001


                                       18
<PAGE>

                   COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
December 31,                                                                                      2000                     1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                      <C>
                                                              ASSETS

Cash and due from banks                                                                       $  2,041,992             $    143,774
Federal funds sold                                                                               9,900,000                       --
                                                                                              ------------             ------------
     Cash and cash equivalents                                                                  11,941,992                  143,774
Investment securities available for sale, at fair value                                            990,200                       --
Federal Reserve Bank stock, at cost                                                                182,100                       --
Atlantic Central Bankers Bank stock, at cost                                                        37,000                       --
Loans, less allowance for credit losses of $90,000 in 2000                                       6,127,655                       --
Premises and equipment, at cost, less
     accumulated depreciation                                                                      399,013                    7,012
Accrued interest receivable                                                                         48,198                       --
Other assets                                                                                        64,195                       --
                                                                                              ------------             ------------

           TOTAL ASSETS                                                                       $ 19,790,353             $    150,786
                                                                                              ============             ============

                                               LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Deposits:
     Noninterest-bearing demand                                                               $  1,154,029             $         --
     Interest-bearing                                                                           11,482,926                       --
                                                                                              ------------             ------------
           Total deposits                                                                       12,636,955                       --
Securities sold under agreements to repurchase                                                      51,684                       --
Accrued interest payable on deposits                                                                14,837                       --
Other liabilities                                                                                   57,667                  101,969
                                                                                              ------------             ------------
           TOTAL LIABILITIES                                                                    12,761,143                  101,969
                                                                                              ------------             ------------

COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENT

Stockholders' equity:
Common stock, par value $.01, authorized 4,000,000 shares;
     issued and outstanding 2000 822,250 shares;
     1999 32,500 shares                                                                              8,223                      325
Surplus                                                                                          8,099,012                  238,872
Accumulated deficit (see Note 2)                                                                (1,078,231)                (190,380)
Accumulated other comprehensive income                                                                 206                       --
                                                                                              ------------             ------------
           TOTAL STOCKHOLDERS' EQUITY                                                            7,029,210                   48,817
                                                                                              ------------             ------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $ 19,790,353             $    150,786
                                                                                              ============             ============
</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
consolidated financial statements.



                                       19
<PAGE>

                   COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
        YEAR ENDED DECEMBER 31, 2000 AND PERIOD JULY 9, 1999 (INCEPTION)
                            THROUGH DECEMBER 31, 1999

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  2000                     1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                       <C>
INTEREST INCOME ON:
     Loans, including fees                                                                    $   119,368               $        --
     U.S. Treasury securities                                                                      20,158                        --
     Federal Reserve Bank stock                                                                     5,767                        --
     Federal funds sold                                                                           276,365                        --
     Deposits in other financial institutions                                                      37,809                     3,991
                                                                                              -----------               -----------
           Total interest income                                                                  459,467                     3,991
                                                                                              -----------               -----------

INTEREST EXPENSE ON:
     Deposits                                                                                      99,852                        --
                                                                                              -----------               -----------

           NET INTEREST INCOME                                                                    359,615                     3,991
                                                                                              -----------               -----------

PROVISION FOR CREDIT LOSSES                                                                        90,000                        --
                                                                                              -----------               -----------

           NET INTEREST INCOME AFTER
              PROVISION FOR CREDIT LOSSES                                                         269,615                     3,991
                                                                                              -----------               -----------

OTHER INCOME:
     Service charges                                                                                9,931                        --
                                                                                              -----------               -----------

OTHER EXPENSES:
     Salaries and employee benefits                                                               643,347                   127,336
     Legal and professional                                                                        89,929                    30,676
     Rent and occupancy                                                                           141,451                     6,000
     Marketing and business development                                                            82,190                    19,589
     Office supplies                                                                               42,146                     4,012
     Other expenses                                                                               168,334                     6,758
                                                                                              -----------               -----------
           Total other expenses                                                                 1,167,397                   194,371
                                                                                              -----------               -----------

NET LOSS                                                                                      $  (887,851)              $  (190,380)
                                                                                              ===========               ===========

BASIC AND DILUTED LOSSES PER SHARE OF COMMON STOCK                                            $     (1.82)              $     (5.86)
                                                                                              ===========               ===========
</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
consolidated financial statements.




                                       20
<PAGE>

                   COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
     FOR THE PERIOD FROM JULY 9, 1999 (INCEPTION) THROUGH DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                                           Common                                        Other           Total
                                                            Stock                     Accumulated    Comprehensive   Stockholders'
                                                         (Par Value)      Surplus        Deficit         Income          Equity
                                                         -----------    -----------    -----------    -----------   -----------
<S>                                                      <C>            <C>            <C>            <C>           <C>
BALANCES, JULY 9, 1999                                   $        --    $        --    $        --    $        --   $        --

Comprehensive loss:
     Net loss                                                     --             --       (190,380)            --      (190,380)
                                                                                                                    -----------
Total comprehensive loss                                                                                               (190,380)

     Costs of raising capital during
       development stage                                          --        (85,803)            --             --       (85,803)

     Shares issued                                               325        324,675             --             --       325,000
                                                         -----------    -----------    -----------    -----------   -----------

BALANCES, DECEMBER 31, 1999                                      325        238,872       (190,380)            --        48,817

COMPREHENSIVE LOSS:
     NET LOSS                                                     --             --       (887,851)            --      (887,851)
     OTHER COMPREHENSIVE INCOME, NET OF TAX:
       UNREALIZED HOLDING GAINS ON SECURITIES
       AVAILABLE FOR SALE ARISING DURING THE PERIOD               --             --             --            206           206
                                                                                                                    -----------
TOTAL COMPREHENSIVE LOSS                                                                                               (887,645)

     COSTS OF RAISING CAPITAL DURING
       DEVELOPMENT STAGE                                          --        (29,463)            --             --       (29,463)

     SHARES ISSUED                                             7,898      7,889,603             --             --     7,897,501
                                                         -----------    -----------    -----------    -----------   -----------

BALANCES, DECEMBER 31, 2000                              $     8,223    $ 8,099,012    $(1,078,231)   $       206   $ 7,029,210
                                                         ===========    ===========    ===========    ===========   ===========
</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
consolidated financial statements.




                                       21
<PAGE>

                   COMMERCEFIRST BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        YEAR ENDED DECEMBER 31, 2000 AND PERIOD JULY 9, 1999 (INCEPTION)
                            THROUGH DECEMBER 31, 1999

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                   2000                 1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Loss                                                                      $ (887,851)          $ (190,380)
     Adjustments to reconcile net loss to net cash
        used by operating activities:
         Depreciation, amortization, and accretion                                     40,200                  412
         Provision for credit losses                                                   90,000                   --
         Change in assets and liabilities:
            Increase in accrued interest receivable                                   (48,198)                  --
            Increase in other assets                                                  (64,195)                  --
            Increase in accrued interest payable                                       14,837                   --
            (Decrease) increase in other liabilities                                  (44,432)             101,969
                                                                            ------------------   ------------------

                 Net cash used by operating activities                               (899,639)             (87,999)
                                                                            ------------------   ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of available for sale securities                                    (1,006,706)                  --
     Purchases of FRB stock                                                          (182,100)                  --
     Increase in loans, net                                                        (6,217,655)                  --
     Purchases of premises and equipment                                             (452,359)              (7,424)
                                                                            ------------------   ------------------

                Net cash used by investing activities                              (7,858,820)              (7,424)
                                                                            ------------------   ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Increase in noninterest-bearing deposits, net                                  1,154,029                   --
     Increase in time deposits, net                                                11,482,926                   --
     Increase in securities sold under agreements to repurchase                        51,684                   --
     Issuance of common stock                                                       7,897,501              325,000
     Costs of raising capital                                                         (29,463)             (85,803)
                                                                            ------------------   ------------------

                Net cash provided by financing activities                          20,556,677              239,197
                                                                            ------------------   ------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                              11,798,218              143,774

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                        143,774                   --
                                                                            ------------------   ------------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                           $ 11,941,992            $ 143,774
                                                                            ==================   ==================

Supplemental Cash Flows Information:
     Interest paid                                                               $     85,015            $      --
     Total increase in unrealized appreciation on
         available for sale securities                                                    336                   --
</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
consolidated financial statements.



                                       22
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CommerceFirst  Bancorp,  Inc. (the "Company") is a bank holding company
         formed on July 9, 1999,  whose principal  activity is the ownership and
         management  of its wholly  owned  subsidiary,  CommerceFirst  Bank (the
         "Bank").  Upon obtaining  sufficient  capital from the Company,  the de
         novo Bank was granted final approvals by regulatory  agencies and began
         its operations on June 29, 2000.

         The Bank  provides  financial  services to  individuals  and  corporate
         customers  located  in Anne  Arundel  County and  surrounding  areas of
         Central  Maryland,  and is subject to competition  from other financial
         institutions.  The Bank is also subject to the  regulations  of certain
         Federal and State of Maryland  (the  "State")  agencies  and  undergoes
         periodic examinations by those regulatory  authorities.  The accounting
         policies  of  the  Bank  conform  to  generally   accepted   accounting
         principles and to general practices within the banking industry.

         Significant   accounting   policies  not  disclosed  elsewhere  in  the
         consolidated financial statements are as follows:

         Principles of Consolidation:

         The  consolidated   financial   statements   include  the  accounts  of
         CommerceFirst   Bancorp,   Inc.  and  its  subsidiary,   CommerceFirst.
         Intercompany balances and transactions have been eliminated. The Parent
         Only financial  statements (see Note 16) of the Company account for the
         subsidiary using the equity method of accounting

         Use of Estimates:

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         dates of the financial  statements and the reported amounts of revenues
         and expenses during the reporting periods.  Actual results could differ
         from those estimates.

         Securities Held to Maturity:

         Bonds,  notes and debentures for which the Bank has the positive intent
         and ability to hold to maturity  are  reported  at cost,  adjusted  for
         premiums and discounts that are recognized in interest income using the
         effective interest rate method over the period to maturity.  Securities
         transferred into held to maturity from the available for sale portfolio
         are recorded at fair value at time of transfer with unrealized gains or
         losses reflected in equity and amortized over the remaining life of the
         security.  The Bank has no investment  securities classified as held to
         maturity as of December 31, 2000 and 1999.

         Securities Available for Sale:

         Marketable  debt  securities  not  classified  as held to maturity  are
         classified as available for sale.  Securities available for sale may be
         sold in response to changes in interest rates, loan demand,  changes in
         prepayment risk and other factors.  Changes in unrealized  appreciation
         (depreciation)  on securities  available for sale are reported in other
         comprehensive  income.  Realized gains (losses) on securities available
         for sale are included in other income  (expense) and, when  applicable,
         are  reported as a  reclassification  adjustment,  net of tax, in other
         comprehensive  income.  The gains and  losses  on  securities  sold are
         determined  by  the  specific   identification  method.   Premiums  and
         discounts  are  recognized  in  interest  income  using  the  effective
         interest rate method over the period to maturity.


                                       23
<PAGE>

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Additionally,  declines  in the  fair  value of  individual  investment
         securities below their cost that are other than temporary are reflected
         as realized losses in the consolidated statements of income.

         Other Securities:

         Federal Reserve Bank ("FRB") and Atlantic Central Bankers Bank ("ACBB")
         stocks are equity interests which do not have readily determinable fair
         values for  purposes of  Statement  of  Financial  Accounting  Standard
         ("SFAS") No 115,  Accounting for Certain Investments in Debt and Equity
         Securities, because their ownership is restricted and lacks a market.

         Loans and Allowance for Credit Losses:

         Loans are generally carried at the amount of unpaid principal, adjusted
         for deferred loan fees,  which are amortized  over the term of the loan
         using the effective interest rate method.  Interest on loans is accrued
         based on the principal amounts outstanding.  It is the Bank's policy to
         discontinue  the  accrual  of  interest  when  a loan  is  specifically
         determined  to be impaired or when  principal or interest is delinquent
         for ninety days or more.  When a loan is placed on  nonaccrual  status,
         all interest  previously  accrued but not collected is reversed against
         current  period  interest  income.  Interest  income  generally  is not
         recognized on specific  impaired loans unless the likelihood of further
         loss  is  remote.  Cash  collections  on  such  loans  are  applied  as
         reductions  of the loan  principal  balance and no  interest  income is
         recognized  on  those  loans  until  the  principal  balance  has  been
         collected. Interest income on other nonaccrual loans is recognized only
         to the extent of interest  payments  received.  The  carrying  value of
         impaired  loans is based on the  present  value of the loan's  expected
         future cash flows or, alternatively, the observable market price of the
         loan or the  fair  value  of the  collateral.  The  Bank  has no  loans
         considered to be impaired as of December 31, 2000 and 1999.

         The allowance for credit losses is established  through a provision for
         credit  losses  charged  to  expense.  Loans are  charged  against  the
         allowance  for  credit  losses  when   management   believes  that  the
         collectibility  of the principal is unlikely.  The allowance,  based on
         evaluations  of  the  collectibility  of  loans  and  prior  loan  loss
         experience,  is an amount that management  believes will be adequate to
         absorb possible losses on existing loans that may become uncollectible.
         The evaluations take into  consideration such factors as changes in the
         nature and volume of the loan  portfolio,  overall  portfolio  quality,
         review of specific problem loans,  and current economic  conditions and
         trends that may affect the borrower's ability to pay.

         While  management  believes it has established the allowance for credit
         losses in accordance with generally accepted accounting  principles and
         has taken into  account  the views of its  regulators  and the  current
         economic environment,  there can be no assurance that in the future the
         Bank's regulators or its economic  environment will not require further
         increases in the allowance.

         Bank Premises and Equipment:

         Bank  premises  and  equipment  are  stated  at cost  less  accumulated
         depreciation.  The provision  for  depreciation  is computed  using the
         straight-line  method over the  estimated  useful  lives of the assets.
         Leasehold  improvements are depreciated over the lesser of the terms of
         the  leases  or  their  estimated   useful  lives.   Expenditures   for
         improvements  which  extend  the life of an asset are  capitalized  and
         depreciated over the asset's remaining useful life. Any gains or losses
         realized on the  disposition of premises and equipment are reflected in
         the  consolidated  statements of income.  Expenditures  for repairs and
         maintenance  are  charged  to  other  expenses  as  incurred.  Computer
         software is recorded at cost and amortized over three years.


                                       24
<PAGE>

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Long-Lived Assets:

         The  carrying  value of  long-lived  assets  and  certain  identifiable
         intangibles is reviewed by the Bank for impairment  whenever  events or
         changes in circumstances  indicate that the carrying amount of an asset
         may not be recoverable.

         Income Taxes:

         The  provision  for  Federal and State  income  taxes is based upon the
         results of operations,  adjusted for tax-exempt income. Deferred income
         taxes are provided by applying enacted statutory tax rates to temporary
         differences between financial and taxable bases.

         Temporary  differences,  which give rise to deferred tax assets, relate
         principally  to the allowance  for credit  losses,  unearned  income on
         loans, and operating loss carryovers.

         Temporary  differences,  which give rise to deferred  tax  liabilities,
         relate principally to accumulated  depreciation,  accretion of discount
         on investment securities,  and unrealized gains on securities available
         for sale.

         Securities Sold Under Agreements to Repurchase:

         Securities  sold  under  agreements  to  repurchase  are  comprised  of
         customer deposit  agreements with daily  maturities.  These obligations
         are  not  federally  insured,  but  are  collateralized  by a  security
         interest in various investment securities. These pledged securities are
         segregated and maintained by a third-party  institution.  The amortized
         cost  and fair  value of these  securities  at  December  31,  2000 was
         $989,864 and $990,200, respectively.

         Credit Risk:

         The Bank has  deposits  in other  financial  institutions  in excess of
         amounts insured by the Federal Deposit Insurance  Corporation ("FDIC").
         The  Bank  had  deposits  and  Federal  funds  sold  of   approximately
         $11,566,000 with one financial institution as of December 31, 2000.

         Cash and Cash Equivalents:

         The Bank has included cash and due from banks and Federal funds sold as
         cash and cash equivalents for the purpose of reporting cash flows.

         Earnings (loss) per common share:

         Basic  earnings  (loss) per common share is  determined by dividing net
         income (loss) by the weighted  average number of shares of common stock
         outstanding.  Diluted earnings (loss) per share is calculated including
         the average dilutive common stock  equivalents  outstanding  during the
         period, using the treasury stock method, unless they are anti-dilutive.
         Potential dilutive common equivalent shares consist of stock warrants.


                                       25
<PAGE>

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Financial Statement Presentation:

         Certain  amounts in the prior  years'  financial  statements  have been
         reclassified to conform to the current year's presentation.


NOTE 2.  DEVELOPMENT STAGE OPERATIONS

         Through June 30, 2000,  the Company  devoted  substantially  all of its
         efforts  towards  establishing  a  new  banking  business  and  raising
         capital, and accordingly,  the Company met the criteria defined by SFAS
         No. 7, Accounting and Reporting by Development Stage  Enterprises.  The
         Bank was fully funded and commenced  lending and full retail and branch
         banking  operations at the end of the second  quarter of 2000 and is no
         longer  considered in the development  stage. The Company had a deficit
         accumulated  during the development  stage of $432,547 through June 30,
         2000.


NOTE 3.  INVESTMENT SECURITIES

         Investment securities are summarized as follows:

<TABLE>
<CAPTION>
                                                                            Gross         Gross
                                                          Amortized       Unrealized    Unrealized        Fair
         DECEMBER 31, 2000                                   Cost           Gains         Losses          Value
         -----------------                                ---------       ----------    ----------      ---------
<S>                                                           <C>               <C>         <C>            <C>
          AVAILABLE FOR SALE:
           U.S. TREASURY (DUE WITHIN ONE YEAR)                $989,864          $336        $    -         $990,200
                                                        ==============   ============  ===========   ===============
</TABLE>


NOTE 4. LOANS

         Major categories of loans are as follows:

<TABLE>
<CAPTION>
                                                                        2000
                                                                    -----------
<S>                                                                 <C>
         Commercial mortgages                                       $ 3,035,518
         Commercial demand and time                                   3,171,947
         Installment                                                     17,030
                                                                    -----------
                                                                      6,224,495
         Unearned income on loans                                        (6,840)
                                                                    -----------
                                                                      6,217,655
         Allowance for credit losses                                    (90,000)
                                                                    -----------
                                                                    $ 6,127,655
                                                                    ===========
</TABLE>

         The Bank makes loans to  customers  located  primarily  in Anne Arundel
         County and  surrounding  areas of Central  Maryland.  Although the loan
         portfolio will be diversified,  its  performance  will be influenced by
         the economy of the region.


                                       26
<PAGE>

NOTE 4. LOANS (CONTINUED)

         Executive  officers,  directors,  and their affiliated  interests enter
         into  loan  transactions  with  the  Bank  in the  ordinary  course  of
         business.  These loans are made on the same terms,  including  interest
         rates and  collateral,  as those  prevailing at the time for comparable
         loans with  unrelated  borrowers.  They do not involve more than normal
         risk of collectibility or present other unfavorable  terms. At December
         31, 2000 the amounts of such loans  outstanding was $1,713,422.  During
         2000,  loan  additions and  repayments  were  $1,882,850  and $169,428,
         respectively.

         The allowance for credit losses is as follows:

<TABLE>
<CAPTION>
                                                                           2000
                                                                         -------
<S>                                                                      <C>
         Balance, beginning of year                                      $    --
         Provision for credit losses                                      90,000
         Recoveries                                                           --
         Loans charged off                                                    --
                                                                         -------
         Balance, end of year                                            $90,000
                                                                         =======
</TABLE>


NOTE 5. PREMISES AND EQUIPMENT

         A summary of premises and equipment is as follows:

<TABLE>
<CAPTION>
                                                                             Useful lives             2000                  1999
                                                                             ------------           ---------             ---------
<S>                                                                            <C>                  <C>                   <C>
Equipment                                                                      3-5 years            $ 215,852             $   7,424
Furniture and fixtures                                                          5 years                93,331                    --
Leasehold improvements                                                         4-5 years               38,351                    --
Software                                                                        3 years               112,249                    --
                                                                                                    ---------             ---------
                                                                                                      459,783                 7,424
Accumulated depreciation and amortization                                                             (60,770)                 (412)
                                                                                                    ---------             ---------
                                                                                                    $ 399,013             $   7,012
                                                                                                    =========             =========
</TABLE>

         Depreciation  expense was $41,650 and $412 for the year ended  December
         31, 2000 and the period July 9,1999  (inception)  through  December 31,
         1999, respectively.  Amortization of software and intangible assets was
         $18,708 for the year ended December 31, 2000.

         The Company leases a facility to serve as the executive offices for the
         Company  and as the main  banking  office for the Bank.  The  facility,
         which is  approximately  8,100  square feet and  located in  Annapolis,
         Maryland,  is leased by the Company for five years, through April 2005,
         with three five year  renewal  options,  at an initial  rent of $19 per
         square foot, plus annual  increases of 3%. Total rent expense  relating
         to this agreement was $121,094 for the year ended December 31, 2000.



                                       27
<PAGE>

NOTE 6. DEPOSITS

         Major classifications of interest-bearing deposits are as follows:

<TABLE>
<CAPTION>
                                                                         2000
                                                                     -----------
<S>                                                                  <C>
         NOW                                                         $   316,469
         Money Market                                                  6,832,223
         Savings                                                          45,788
         Certificates of Deposit, $100,000 or more                     4,216,988
         Other time deposits                                              71,458
                                                                     -----------
                                                                     $11,482,926
                                                                     ===========
</TABLE>

         Interest expense on deposits is as follows:

<TABLE>
<CAPTION>
                                                                           2000
                                                                         -------
<S>                                                                      <C>
         NOW                                                             $   308
         Money Market                                                     68,776
         Savings                                                             537
         Certificates of Deposit, $100,000 or more                        28,971
         Other time deposits                                               1,260
                                                                         -------
                                                                         $99,852
                                                                         =======
</TABLE>

         At December 31, 2000,  the  scheduled  maturities  of time deposits are
approximately as follows:

<TABLE>
<CAPTION>
                                                                         2000
                                                                      ----------
<S>                                                                   <C>
         2001                                                         $2,910,000
         2002                                                          1,226,000
         2003                                                                 --
         2004                                                            152,000
                                                                      ----------
                                                                      $4,288,000
                                                                      ==========
</TABLE>

         Deposit  balances  of  executive   officers  and  directors  and  their
         affiliated interests totaled  approximately  $5,345,000 at December 31,
         2000.

         The Bank had no brokered deposits at December 31, 2000.


                                       28
<PAGE>

NOTE 7. INCOME TAXES

         Income taxes included in other liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                                        2000                 1999
                                                                                                     ---------            ---------
<S>                                                                                                  <C>                  <C>
         Deferred tax assets:
            Net operating loss carryforwards                                                         $ 263,804            $  39,292
            Allowance for credit losses                                                                 36,900                   --
            Deferred loan fees                                                                           2,804                   --
                                                                                                     ---------            ---------
                                                                                                       303,508               39,292
                                                                                                     ---------            ---------
         Deferred tax liabilities:
            Accumulated securities discount accretion                                                    8,265                   --
            Net unrealized gains on securities available for sale                                          130                   --
            Accumulated depreciation                                                                     7,949                   84
                                                                                                     ---------            ---------
                                                                                                        16,344                   84
                                                                                                     ---------            ---------
         Net deferred tax asset                                                                        287,164               39,208
         Valuation allowance                                                                          (287,294)             (39,208)
                                                                                                     ---------            ---------
         Net deferred tax liability                                                                  $    (130)           $      --
                                                                                                     =========            =========
</TABLE>

         A valuation  allowance has been established for net deferred tax assets
         relating  to  all  amounts  other  than   unrealized   gains/losses  on
         securities  available for sale, as the Bank has yet to attain sustained
         profitability. Operating losses of approximately $854,000 are available
         to offset future taxable income through 2019.


NOTE 8. OTHER OPERATING EXPENSES

         Other operating expenses include the following:

<TABLE>
<CAPTION>
                                                                                                   2000                       1999
                                                                                                 --------                   --------
<S>                                                                                              <C>                        <C>
         Data processing                                                                         $  8,865                   $     --
         Liability insurance                                                                       10,658                         --
         Vendor support                                                                            12,741                         --
         Software support                                                                          29,537                         --
         Telephone                                                                                  5,424                         --
         Depreciation and amortization                                                             60,358                        412
         Other                                                                                     40,751                      6,346
                                                                                                 --------                   --------
                                                                                                 $168,334                   $  6,758
                                                                                                 ========                   ========
</TABLE>

NOTE 9.  COMMITMENTS AND CONTINGENCIES

         Financial instruments:

         The Bank is a party to financial  instruments  in the normal  course of
         business to meet the financing needs of its customers.  These financial
         instruments include commitments to extend credit and standby letters of
         credit,  which  involve,  to varying  degrees,  elements  of credit and
         interest rate risk in excess of the



                                       29
<PAGE>

NOTE 9.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

         amounts recognized in the consolidated financial statements.

         Outstanding loan commitments and unused lines of credit are as follows:

<TABLE>
<CAPTION>
                                                                         2000
                                                                      ----------
<S>                                                                   <C>
Loan commitments:
   Commercial                                                         $1,229,000
                                                                      ==========

Unused lines of credit:
  Commercial lines                                                    $1,823,031
                                                                      ==========
</TABLE>

         There were no outstanding  loan  commitments and unused lines of credit
         at December 31, 1999.

         Loan  commitments  and  lines  of  credit  are  agreements  to  lend to
         customers  as long as there is no violation  of any  conditions  of the
         contracts.  Loan  commitments  generally  have interest  rates fixed at
         current market amounts, fixed expiration dates, and may require payment
         of a fee. Lines of credit generally have variable  interest rates. Many
         of the loan  commitments  and lines of credit  are  expected  to expire
         without being drawn upon; accordingly,  the total commitment amounts do
         not necessarily represent future cash requirements.  The Bank evaluates
         each customer's creditworthiness on a case-by-case basis. The amount of
         collateral or other security obtained,  if deemed necessary by the Bank
         upon extension of credit, is based on management's  credit  evaluation.
         Collateral  held  varies but may  include  deposits  held in  financial
         institutions,  U.S. Treasury securities,  other marketable  securities,
         accounts  receivable,   inventory,  property  and  equipment,  personal
         residences,  income-producing  commercial  properties,  and land  under
         development.  Personal  guarantees  are also  obtained to provide added
         security for certain commitments.

         The Bank's  exposure to credit loss in the event of  nonperformance  by
         the  customer  is  the  contractual  amount  of  the  commitment.  Loan
         commitments  and lines of credit are made on the same terms,  including
         collateral, as outstanding loans.

         Employment agreements:

         The Company has employment agreements with the Chairman of the Board of
         Directors,  President, and Executive Vice President,  which will expire
         in July 2002, August 2004, and August 2004, respectively.


NOTE 10. STOCKHOLDERS' EQUITY

         Regulatory capital requirements:

         The  Company  and  Bank  are  subject  to  various  regulatory  capital
         requirements  administered  by  Federal  and  State  banking  agencies.
         Failure to meet  minimum  capital  requirements  can  initiate  certain
         mandatory,  and possibly additional discretionary actions by regulators
         that,  if  undertaken,  could  have a  direct  material  effect  on the
         Company's financial statements. The Company and Bank must meet specific
         capital guidelines that involve quantitative  measures of the Company's
         and Bank's assets, liabilities,  and certain off-balance sheet items as
         calculated under regulatory  accounting  principles.  The Company's and
         Bank's  capital  amounts  and   classification   are  also  subject  to
         qualitative   judgments  by  the  regulators  about  components,   risk
         weightings, and other factors.

         Quantitative  measures  established  by  regulation  to ensure  capital
         adequacy  require the Company and Bank to maintain  minimum amounts and
         ratios (as defined in the  regulations)  of total and Tier I capital to
         risk-weighted   assets  and  of  Tier  I  capital  to  average  assets.
         Management believes,  as of December 31, 2000 the Company and Bank meet
         all capital adequacy  requirements to which it is subject.  The Company
         was not subject to regulatory capital requirements in 1999.



                                       30
<PAGE>
NOTE 10. STOCKHOLDERS' EQUITY (CONTINUED)

         As of December 31,  2000,  the most recent  notification  from the FDIC
         categorized the Bank as well capitalized under the regulatory framework
         for prompt corrective action. To be categorized as well capitalized the
         Bank must maintain  minimum total  risk-based,  Tier I risk-based,  and
         Tier I leverage  ratios.  There are no  conditions or events since that
         notification that management believes have changed the Bank's category.

         A  comparison   of  capital  as  of  December  31,  2000  with  minimum
         requirements is approximately as follows:

<TABLE>
<CAPTION>
                                                                                                        TO BE WELL CAPITALIZED
                                                                                   FOR CAPITAL          UNDER PROMPT CORRECTIVE
                                                            ACTUAL               ADEQUACY PURPOSES         ACTION PROVISIONS

                                                     AMOUNT        RATIO        AMOUNT        RATIO       AMOUNT       RATIO
                                                     ------        -----        ------        -----       ------       -----
<S>                                                 <C>            <C>           <C>           <C>      <C>             <C>
         AS OF DECEMBER 31, 2000
             TOTAL CAPITAL
               (TO RISK WEIGHTED ASSETS)           $7,119,000      58.7%      $  971,000       8.0%               N/A
                COMPANY
                BANK                                5,846,000      49.2%         950,000       8.0%     $1,188,000      10.0%

             TIER I CAPITAL
               (TO RISK WEIGHTED ASSETS)            7,029,000      57.9%         485,000       4.0%               N/A
                COMPANY
                BANK                                5,756,000      48.5%         475,000       4.0%        713,000       6.0%

             TIER I CAPITAL                         7,029,000      53.0%         531,000       4.0%               N/A
               (TO AVERAGE ASSETS)
                COMPANY
                BANK                                5,756,000      48.0%         480,000       4.0%        600,000       5.0%
</TABLE>


NOTE 11. WARRANT AND OPTION PLANS

         The Board of  Directors  of the Company has adopted a Warrant Plan that
         will issue non-transferable warrants to each organizer. At December 31,
         2000, there were 123,337 shares obligated to be issued under the plan.

         The plan calls for  warrants to vest over three years at a rate of 30%,
         30%, and 40%, respectively and entitles each holder thereof to purchase
         one share of stock. The exercise price of each warrant is $10 per share
         and must be exercised,  unless earlier called by the Company, not later
         than 10  years  from  August  18,  2000  (date  of  termination  of the
         offering).  Generally,  vested  warrants  expire one year following the
         date that the organizer  ceases to be a director of the Bank.  Warrants
         may be  called  by  the  Company  in the  event  that a  merger,  sale,
         acquisition,  share  exchange or other similar  extraordinary  event is
         approved by the Board of  Directors  of the  Company.  Upon call by the
         Company,  warrant  holders  have 90 days in  which  to  exercise  their
         warrants.  If they are not exercised,  the Company will pay the warrant
         holder the difference between the exercise price of the warrant and the
         fair  market  value  of the  stock  of the  Company  at the time of the
         closing of the transaction.  In the event that an applicable Federal or
         state regulatory  authority  determine that the Bank's capital fails to
         meet minimum capital requirements, such regulatory authority may direct
         the  Company  to  call  all  outstanding  warrants.  Any  warrants  not
         exercised will be thereafter forfeited.

         The Board of  Directors  of the Company  also  intends to adopt a stock
         option plan as a performance




                                       31
<PAGE>
NOTE 11. WARRANT AND OPTION PLANS (CONTINUED)

         incentive for the Bank's  officers and key  employees.  The  employment
         contracts,  signed  by  the  Chairman  of  the  Board,  President,  and
         Executive   Vice   President,    obligates   the   Company   to   issue
         non-transferable  stock  options  in the amount of 2,500,  10,000,  and
         7,500, respectively, at an exercise price of $10 per share. At December
         31, 2000, no stock options had been issued by the Company.


NOTE 12. EMPLOYEE BENEFIT PLANS

         The Bank has employee  benefit  programs that include health and dental
         insurance, life and long-term and short-term disability insurance and a
         401(k)  plan  under  which  the  Bank   currently   makes  no  matching
         contributions.


NOTE 13. LOSSES PER COMMON SHARE

         Losses per common share are calculated as follows:

<TABLE>
<CAPTION>
                                                                            2000               1999
                                                                      ---------------    ----------------
<S>                                                                   <C>                <C>
        Basic:
           Net loss                                                   $      (887,851)   $       (190,380)
           Weighted average common shares outstanding                          487,763              32,500
           Basic net loss per share                                   $         (1.82)   $          (5.86)
</TABLE>

         Diluted losses per share  calculations were not applicable for 2000 and
         1999  since  consideration  of  outstanding  warrants  would  have been
         anti-dilutive.


NOTE 14. RELATED PARTY TRANSACTIONS

         The Bank paid  $90,370  during the year ended  December  31,  2000 to a
         computer  consulting  firm of  which a  Director  is also a  principal.
         Expenditures  included  computer  hardware,   software,   installation,
         training and support services.

         The Bank paid  $29,038  during the year  ended  December  31,  2000 for
         various group  insurance  benefits for which a Director will ultimately
         receive commission compensation.

         The Bank also paid $2,115  during the year ended  December 31, 2000 for
         office supplies to a company of which a Director is also a principal.

         Expenses  of  approximately  $61,000  and $26,000  were paid  for legal
         services  and rent with a law firm,  of which the Chairman of the Board
         of the Company is a principal,  for the periods ended December 31, 2000
         and 1999, respectively.


NOTE 15.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In September  2000,  the Financial  Accounting  Standards  Board (FASB)
         issued  Statement  No. 140,  Accounting  for Transfers and Servicing of
         Financial  Assets and  Extinguishment  of  Liabilities.  This statement
         replaces  Statement  No. 125. The  Statement  revises the standards for
         accounting for  securitizations and other transfers of financial assets
         and collateral and required disclosures. Statement No. 140 is effective
         for transfers and servicing of financial assets and  extinguishments of
         liabilities  occurring  after March 31,  2001,  with the  exception  of
         certain financial statement disclosures, which are effective for fiscal
         years  ending  after  December  15,  2000.  The  Bank is  currently  in
         compliance with this pronouncement.


                                       32
<PAGE>

NOTE 16. PARENT COMPANY FINANCIAL INFORMATION

         The Balance  Sheets,  Statements of Operations,  and Statements of Cash
         Flows for  CommerceFirst  Bancorp,  Inc.  (Parent  Only) are  presented
         below:

<TABLE>
<CAPTION>
                                                                   BALANCE SHEETS

        December 31,                                                                                2000                    1999
<S>                                                                                             <C>                     <C>
                                             ASSETS
        Cash                                                                                    $ 1,270,282             $   143,774
        Investment in CommerceFirst                                                               5,755,928                      --
        Premises and equipment, at cost, less                                                            --                   7,012
           accumulated depreciation
        Other assets                                                                                  3,000                      --
                                                                                                -----------             -----------
                TOTAL ASSETS                                                                    $ 7,029,210             $   150,786
                                                                                                ===========             ===========

                               LIABILITIES AND STOCKHOLDERS' EQUITY
        Other liabilities                                                                       $        --             $   101,969
                                                                                                -----------             -----------
                TOTAL LIABILITIES                                                                        --                 101,969
                                                                                                -----------             -----------

        Stockholders' equity:
            Common stock                                                                              8,223                     325
            Surplus                                                                               8,099,012                 238,872
            Accumulated deficit                                                                  (1,078,231)               (190,380)
            Accumulated other comprehensive income                                                      206                      --
                                                                                                -----------             -----------
                TOTAL STOCKHOLDERS' EQUITY                                                        7,029,210                  48,817
                                                                                                -----------             -----------
                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $ 7,029,210             $   150,786
                                                                                                ===========             ===========


                                                      STATEMENTS OF OPERATIONS
                     Year Ended December 31, 2000 and Period July 9, 1999 (Inception) through December 31, 1999

        Income                                                                                  $   115,188             $     3,991
        Expenses                                                                                   (258,761)               (194,371)
                                                                                                -----------             -----------
        Loss before equity in undistributed net loss of subsidiary                                 (143,573)               (190,380)
        Change in undistributed net loss of subsidiary                                             (744,278)                     --
                                                                                                -----------             -----------
                NET LOSS                                                                        $  (887,851)            $  (190,380)
                                                                                                ===========             ===========
</TABLE>


                                       33
<PAGE>

NOTE 16. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                          STATEMENTS OF CASH FLOWS
                          Year Ended December 31, 2000 and Period July 9, 1999 (Inception) through December 31, 1999
<S>                                                                                              <C>                    <C>

        CASH FLOWS FROM OPERATING ACTIVITIES:
          Net loss                                                                               $  (887,851)           $  (190,380)
          Adjustments to reconcile net loss to net
            cash used by operating activities:
               Depreciation                                                                               --                    412
               Increase in other assets                                                               (3,000)                    --
               (Decrease) increase in other liabilities                                             (101,969)               101,969
               Change in undistributable net loss of subsidiary                                      744,278                     --
                                                                                                 -----------            -----------

                 Net cash used by operating activities                                              (248,542)               (87,999)
                                                                                                 -----------            -----------

        CASH FLOWS FROM INVESTING ACTIVITIES:
          Investment in subsidiary                                                                (6,500,000)                    --
          Proceeds from sales of premises and equipment                                                7,012                     --
          Purchases of premises and equipment                                                             --                 (7,424)
                                                                                                 -----------            -----------
                  Net cash used by investing activities                                           (6,492,988)                (7,424)
                                                                                                 -----------            -----------

        CASH FLOWS FROM FINANCING ACTIVITIES:
          Issuance of common stock                                                                 7,897,501                325,000
          Costs of raising capital                                                                   (29,463)               (85,803)
                                                                                                 -----------            -----------
                 Net cash provided by financing activities                                         7,868,038                239,197
                                                                                                 -----------            -----------
        INCREASE IN CASH                                                                           1,126,508                143,774
        CASH, BEGINNING OF PERIOD                                                                    143,774                     --
                                                                                                 -----------            -----------
        CASH, END OF YEAR                                                                        $ 1,270,282            $   143,774
                                                                                                 ===========            ===========
</TABLE>



                                       34
<PAGE>

NOTE 17. QUARTERLY RESULTS OF OPERATIONS (Unaudited)

         The following is a summary of the Company's unaudited quarterly results
         of operations:

<TABLE>
<CAPTION>
                                 2000                                                 THREE MONTHS ENDED,
         --------------------------------------------------------------------------------------------------------------------
         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       DECEMBER 31      SEPTEMBER 30      JUNE 30         MARCH 31
         --------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>             <C>             <C>
         INTEREST INCOME                                            $243             $133            $ 75            $  9
         INTEREST EXPENSE                                             81               19              --              --
         NET INTEREST INCOME                                         162              114              75               9
         PROVISION FOR CREDIT LOSSES                                  45               45              --              --
         NET LOSS                                                    305              341              85             174
         NET LOSS PER SHARE (BASIC AND DILUTED)                    $0.27            $0.43           $0.30           $3.21
</TABLE>

        A summary of the Company's unaudited quarterly results of operations are
        not presented for 1999 as the Company was still in the development stage
        and had no revenues from banking operations.


NOTE 18. SUBSEQUENT EVENT

        In January 2001, the Bank obtained a $2,000,000  Federal Funds borrowing
        facility with a financial institution, expiring September 2001.


                                       35
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

         None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The  Company's  Bylaws  provide  that the  number of  Directors  of the
Company shall be fixed from time to time by the Board of Directors but shall not
be less than 3 or more than 25.  The  Board  has  fixed  the  current  number of
Directors at 5. The Company's  Bylaws provide that the Board of Directors  shall
be divided into three classes, the first of which shall serve for an initial one
year term,  the second of which shall serve for an initial two year term and the
third of which shall serve for an initial three year term.  Upon the  expiration
of the initial  terms,  directors  shall be elected for  three-year  terms.  The
Bylaws may be amended by action of the Board of Directors.  All of the Company's
current  Directors  were duly elected to the Board and will continue to serve as
Directors until their successors are elected and qualified.

         Set  forth  below is a  description  of the  principal  occupation  and
business  experience  of each of the  directors  and  executive  officers of the
Company.  Except as expressly  indicated below,  each person has been engaged in
his principal occupation for at least five years.

Milton D.  Jernigan,  II.  Mr.  Jernigan,  46, an  attorney  engaged  in private
practice since 1982, is the co-managing  principal of the business and corporate
law firm of McNamee,  Hosea,  Jernigan & Kim P.A.  Mr.  Jernigan is the Resident
Principal-in-Charge  of the firm's Annapolis  office.  Mr.  Jernigan's  practice
areas have included banking and regulatory law and he has represented  banks and
bank  holding   companies  in  matters  before  the  Federal  Deposit  Insurance
Corporation,  the Federal  Reserve Board,  the Federal Reserve Bank of Richmond,
the Federal  Reserve Bank of  Cleveland,  the Office of the  Comptroller  of the
Currency,  the Maryland  State Bank  Commissioner,  the  Securities and Exchange
Commission and the Maryland State Securities Commissioner.  Mr. Jernigan was one
of the  founding  organizers  and members of the Board of  Directors of Commerce
Bank in College Park, Maryland. Commerce Bank was formed and opened in 1989. Mr.
Jernigan  served as General Counsel to Commerce Bank from its  organization  and
until its acquisition by MainStreet  BankGroup in December 1997.  MainStreet was
subsequently  acquired by BB&T  Corporation  in 1999.  From 1989 until 1993, Mr.
Jernigan  served as a member of the Board of Directors  of Commerce  Bank and on
its  Executive,  Loan,  Compensation  and  Strategic  Planning  Committees.  Mr.
Jernigan is a resident of Annapolis, Maryland and is active in local chambers of
commerce, service and civic organizations.  Mr. Jernigan is a founding organizer
of the  Company  and a member of the Board of  Directors  of the Company and the
Bank. Mr. Jernigan's current term as director of the Company expires in 2002.

Alvin R. Maier. Mr. Maier, 67, a private investor, is engaged in the business of
manufacturing  and selling building  supplies as President of Ernest Maier, Inc.
Mr. Maier has been a corporate  officer of Ernest Maier,  Inc.  since 1955.  Mr.
Maier was one of the original  organizers  and directors of Commerce  Bank.  Mr.
Maier  served as  Chairman  of the Board of  Commerce  Bank (and  following  its
acquisition by MainStreet) from 1989 until the acquisition of MainStreet by BB&T
Corporation in 1999 and he served on the bank's  Executive,  Loan,  Compensation
and Strategic Planning Committees. A Korean War veteran, Mr. Maier is a resident
of Anne  Arundel  County  and is  active  in  several  local  service  and civic
organizations,  including Rotary International in which he has a 28-year perfect
attendance record. Mr. Maier is a founding organizer of the Company and a member
of the Board of Directors of the Company and the Bank. Mr. Maier's  current term
as director of the Company expires in 2003.

Richard J. Morgan.  Mr. Morgan,  53, until joining the Company and the Bank, was
involved as a cabinet level officer in the County Executive  Administration,  in
the  management  of economic and  community  development  programs,  focusing on
marketing,  project and financial management,  throughout Anne Arundel County as
President  and Chief  Executive  Officer of Anne  Arundel  Economic  Development
Corporation ("AAEDC"), a position he held since 1997. Mr. Morgan was awarded the
Service  Excellence  Award by the Anne Arundel  Trade Council in 1998 and County
Business  Leader of the Year in 1994.  From 1990 to 1997,  Mr.  Morgan served as
President and Chief



                                       36
<PAGE>

Executive  Officer of Annapolis  National Bank.  Under Mr. Morgan's  leadership,
Annapolis  National Bank became a successful,  well-capitalized  and  profitable
commercial bank and earned an "Outstanding" CRA rating.  Annapolis National Bank
became one of Maryland's top five SBA lenders and Mr. Morgan was selected as the
SBA's  Financial  Services Leader of the Year for the State of Maryland in 1994.
Mr. Morgan's has also served as Chief Financial Officer and Group Vice President
of the Toddson Company,  Inc.; Chief Financial  Officer and Group Vice President
of the  Phillips  Corporation;  Regional  Vice  President  and Loan  Officer  of
Maryland  National  Bank and served in  commercial  lending  roles  with  Marine
Midland Bank in New York from 1970 to 1977.  At Maryland  National  Bank, he was
responsible  for  building  the  commercial  loan  portfolio  in the  Washington
suburban  market  from zero to $150  million.  Mr.  Morgan  has over 30 years of
banking and financial  management  experience and has served on numerous boards,
commissions  and community  service  groups in Annapolis and Anne Arundel County
including  the as Board Chair of United Way of Anne  Arundel  County;  Board and
Executive  Committee  of the  Annapolis  and Anne  Arundel  Chamber of  Commerce
(formerly  Trade  Council)  and  Chair  of  the  Chambers  Economic  Development
Committee;  State of Maryland's Neighborhood  Revitalization Loan Committee; and
the Treasurer and member of the Executive  Committee of the Maryland  Industrial
Development  Association;  Board and  Executive  Committee  of the Anne  Arundel
Community College Foundation.  Mr. Morgan is a founding organizer of the Company
and a member of the Board of Directors of the Company and the Bank. Mr. Morgan's
current term as director of the Company expires in 2003.

Edward B.  Howlin,  Jr. Mr.  Howlin,  64, is the  Chairman  and Chief  Executive
Officer of Howlin Realty Management, Inc., a real estate holding, management and
development  firm,  and of Edward B.  Howlin,  Inc.,  a  management  and holding
company,  and of its  subsidiary  companies,  Dunkirk  Supply,  Inc.  and Howlin
Concrete, Inc. Mr. Howlin is also Chief Executive Officer of Howlin Construction
Company, Inc. In addition to real estate management and development,  the Howlin
companies construct  residential  subdivisions and design,  manufacture and sell
construction components, systems and supplies to various commercial, residential
and government projects primarily in Southern Maryland. Mr. Howlin is a founding
organizer  of the Company and a member of the Board of  Directors of the Company
and the Bank. Mr.  Howlin's  current term as director of the Company  expires in
2001.

Lamont Thomas. Mr. Thomas, 60, until joining the Company and the Bank, served as
the  Executive  Vice  President  and Treasurer of Commerce Bank in College Park,
Maryland  from  September  1989 until June 1999 serving as chief  operating  and
financial officer.  Mr. Thomas was one of the original  organizers and directors
of Commerce Bank and served as a director until MainStreet's acquisition by BB&T
in 1999.  As a director,  Mr. Thomas  served on the Commerce  Bank's  Executive,
Asset/Liability  and  Strategic  Planning   Committees.   From  1976  until  the
organization of Commerce Bank, Mr. Thomas managed numerous  corporate  functions
of  Citizens  Bank of  Maryland,  a then  $1.8  billion  commercial  bank with a
100-plus-branch  network in the  Washington  D.C. area as its Vice President and
Treasurer.  Mr.  Thomas was also  responsible  for all liaisons with the Federal
Deposit  Insurance  Corporation and the Maryland State Banking  Department.  Mr.
Thomas  is a  founding  organizer  of the  Company  and a member of the Board of
Directors of the Company and the Bank. Mr.  Thomas'  current term as director of
the Company expires in 2001.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth a comprehensive  overview of the compensation for
all executive  officers of the Company who received  total salary of $100,000 or
more during the fiscal year ended  December 31, 2000. No bonuses were awarded in
2000.


                                       37
<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                      Long-term
                                                                                    Compensation
                                             Annual Compensation                       Awards
-----------------------------    ---------------------------------------------    ------------------    ------------------
                                                                                     Securities
                                                                                     Underlying             All Other
Name and Principal Position         Year           Salary          Bonus(1)            Options           Compensation($)
-----------------------------    ------------    ------------    -------------    ------------------    ------------------
<S>                                 <C>           <C>                 <C>                 <C>               <C>
Richard J. Morgan                   2000          $145,539            $0                  0(1)              $3,706(2)
President and Chief
Executive Officer of the            1999           $31,250            $0                  0                    $0
Company and the Bank




Lamont Thomas,                      2000          $137,797            $0                  0(3)              $4,127(4)
Executive Vice President-
Chief Operating Officer of          1999           $30,000            $0                  0                    $0
the Company and the Bank
<FN>
(1) Mr. Morgan is entitled to receive options to purchase 10,000 shares of Common Stock, which have not yet been granted.
(2) Represents insurance premium of $716 and car allowance of $2,990.
(3) Mr. Thomas is entitled to receive options to purchase 7,500 shares of Common Stock, which have not yet been granted.
(4) Represents insurance premium of $1,137 and car allowance of $2,990
</FN>
</TABLE>

         Employment Agreements. Mr. Morgan and Mr. Thomas each has an employment
agreement  with the Company  pursuant to which they serve as President and Chief
Executive  Officer of the Bank, and Executive Vice President and Chief Operating
Officer of the Bank, respectively.

         President's Employment Agreement.  Under his employment agreement,  Mr.
Morgan is entitled to receive an annual  base  salary of  $125,000,  a term life
insurance policy in the amount of $300,000, options to purchase 10,000 shares of
common  stock at an  exercise  price of $10.00  per  share.  Mr.  Morgan is also
entitled to receive  bonuses and  additional  grants of options as determined by
the  Board of  Directors,  and to  participate  in all  other  health,  welfare,
benefit,  stock, option and bonus plans, if any, generally available to officers
or  employees  of the  Company.  Mr.  Morgan is also be entitled to the use of a
leased  vehicle or a  comparable  vehicle  allowance.  The term of Mr.  Morgan's
agreement expires on August 2, 2004 unless sooner  terminated.  If the agreement
is terminated by the Company without cause, the Company will continue to pay Mr.
Morgan his annual  compensation  and  benefits as severance  compensation  for a
period of 12 months.  In the event of any change in control of the Company,  Mr.
Morgan may  continue  his  employment,  execute a new  employment  agreement  on
mutually agreeable terms or resign his employment.  In the event that Mr. Morgan
resigns or is terminated  within 12 months of the change in control,  Mr. Morgan
will be entitled  to the sum of twice the base  salary and  bonuses  paid to him
during the 12 months immediately preceding the change in control.

         Executive Vice President's  Employment Agreement.  Under his employment
agreement,  Mr. Thomas is entitled to receive an annual base salary of $120,000,
a term life insurance policy in the amount of $200,000,  and options to purchase
7,500  shares of common  stock at an  exercise  price of $10.00 per  share.  Mr.
Thomas is also entitled to receive  bonuses and additional  grants of options as
determined by the Board of Directors,  and to  participate  in all other health,
welfare,  benefit, stock, option and bonus plans, if any, generally available to
officers or employees of the Company.  Mr. Thomas is also entitled to the use of
a leased  vehicle or a comparable  vehicle  allowance.  The term of Mr.  Thomas'
employment agreement expires on August 1, 2004 unless sooner terminated.  If the
agreement is terminated by the Company without cause,  the Company will continue
to pay Mr. Thomas his annual compensation and benefits as severance compensation
for a period of 12 months. In the event of any change in control of the Company,
Mr. Thomas may continue his  employment,  execute a new employment  agreement on
mutually agreeable terms or resign his employment.  In the event that Mr. Thomas
resigns or is terminated  within 12 months of the change in control,  Mr. Thomas
will be entitled  to the sum of twice the base  salary and  bonuses  paid to him
Thomas during the 12 months immediately preceding the change in control.

         Employee  Benefit  Plans.  The Bank  provides  a benefit  program  that
includes  health  and  dental  insurance,  life  and long  term  and  short-term
disability  insurance and a 401(k) plan under which the Company  currently makes
no matching contributions.



                                       38
<PAGE>

DIRECTOR COMPENSATION

          Directors  of the Company and Bank did not  receive  compensation  for
membership on the Board or  attendance  at Board or committee  meetings in 2000.
Under his  employment  agreement with the Company,  Mr.  Jernigan is entitled to
receive  $30,000 per year for service as Chairman of the Boards of  Directors of
the  Company  and the  Bank,  a term  life  insurance  policy  in the  amount of
$100,000,  and options to  purchase  stock  2,500  shares of common  stock at an
exercise price of $10.00 per share,  which have not yet been issued.  He is also
entitled to receive cash bonuses and additional  grants of options as determined
by the Board of Directors.  The term of Mr. Jernigan's employment agreement will
expire on July 14, 2002 unless sooner terminated. If the agreement is terminated
by the  Company  without  cause,  the  Company  will  continue to pay his annual
compensation  and benefits as severance  compensation for a period of 12 months.
In the event of any change in control (as defined) of the Company,  Mr. Jernigan
may  continue his  employment,  execute a new  employment  agreement on mutually
agreeable terms or resign his employment. In the event that Mr. Jernigan resigns
or is terminated within 12 months of the change in control,  he will be entitled
to the sum of twice the base salary and bonuses paid to Mr.  Jernigan during the
12 months immediately preceding the change in control.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

                  The  following  table sets  forth  certain  information  as of
December  31,  2000  concerning  the  number  and  percentage  of  shares of the
Company's  Common  Stock  beneficially  owned  by its  directors,  nominees  for
director,  executive officers the compensation of which is disclosed herein, and
by its directors and all executive  officers as a group,  as well as information
regarding  each other  person known by the Company to own in excess of 5% of the
outstanding Common Stock.  Except as otherwise  indicated,  all shares are owned
directly,  and the named person  possesses sole voting and sole investment power
with respect to all such shares. Except as set forth below, the Company knows of
no  other  person  or  persons,  who  beneficially  own in  excess  of 5% of the
Company's  Common Stock.  Further,  the Company is not aware of any  arrangement
that at a subsequent date may result in a change of control of the Company.

<TABLE>
<CAPTION>
Name                                              Age      Position                         Number of Shares   Percentage(1)
----                                              ---      --------                         ----------------   -------------
<S>                                               <C>      <C>                                  <C>                <C>
Milton D. Jernigan II                              46      Chairman of the Board of the          25,300             3.08%
                                                           Company and Bank

Alvin R. Maier                                     67      Vice Chairman, Secretary and          78,100             9.50%
CommerceFirst Bank                                         Treasurer of the Company;
1804 West Street                                           Vice Chairman of the Bank
Annapolis MD 21401

Richard J. Morgan                                  53      President and CEO of the               7,000             0.85%
                                                           Company and the Bank

Lamont Thomas                                      60      Executive Vice President of the       20,500             2.49%
                                                           Company and the Bank; Treasurer
                                                           of the Bank

Edward B. Howlin, Jr                               64      Director of the Company and          100,000            12.16%
Howlin Construction Co., Inc.                              the Bank
2880 Dunkirk Way
Dunkirk MD 20754

All directors and executive officers of
the Company as a group (5 persons)                                                              230,900            28.08%
                                                                                                =======            =====

All directors and executive officers of
the Company and the Bank as a group (22 persons)                                                458,400            55.75%
                                                                                                =======            =====
-----------------------------
<FN>
1) Represents percentage of 822,250 shares issued and outstanding as of March 15, 2001. At March 15, 2001 there were no outstanding
   options or warrants that were exercisable within 60 days of March 15, 2001.
</FN>
</TABLE>


                                       39
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The  Bank  has  had,  and  expects  to  have  in  the  future,  banking
transactions  in the  ordinary  course  of  business  with  some  of its and the
Company's directors,  officers, and employees and their associates. In the past,
substantially all of such  transactions  have been on the same terms,  including
interest rates,  maturities and collateral  requirements as those  prevailing at
the time for comparable  transactions  with  non-affiliated  persons and did not
involve more than the normal risk of collectibility or present other unfavorable
features.

         The  maximum  aggregate  amount  of loans to  officers,  directors  and
affiliates  of  the  Bank  during  2000  amounted  to  $1,882,850,  representing
approximately 26.8% of the Company's total shareholders'  equity at December 31,
2000. In the opinion of the Board of Directors,  the terms of these loans are no
less favorable to the Bank than terms of the loans from the Bank to unaffiliated
parties.  On  December  31,  2000,  $1,713,422  of  loans  were  outstanding  to
individuals  who,  during 2000,  were  officers,  directors or affiliates of the
Bank. At the time each loan was made, management believed that the loan involved
no more  than  the  normal  risk of  collectibility  and did not  present  other
unfavorable  features.  None of  such  loans  were  classified  as  Substandard,
Doubtful or Loss.

         During  2000,  the Bank paid a  computer  consulting  firm of which Mr.
Watson, a director of the Bank, is a principal,  $90,370 for equipment purchases
and related services.  The Company paid the law firm of which Mr. Jernigan,  the
Chairman of the Board of Directors,  is a principal,  $26,000 for legal services
and rent of the  Company's  temporary  offices in 1999,  and  $60,407  for legal
services  and  rent in  2000.  The  Company  believes  that  the  terms of these
transactions  were at least as  favorable  to the  Company  as could  have  been
obtained from unaffiliated parties.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

<TABLE>
<CAPTION>
Exhibit No.       Description of Exhibits
<S>               <C>
3(a)              Certificate of Incorporation of the Company, as amended (1)
3(b)              Bylaws of the Company (1)
10(a)             Employment Agreement between Richard J. Morgan and the Company (2)
10(b)             Employment Agreement between Lamont Thomas and the Company (3)
11                Statement Regarding Computation of Per Share Income
21                Subsidiaries of the Registrant

         The sole subsidiary of the Registrant is CommerceFirst Bank, a Maryland
         chartered commercial bank.

99(a)             Amended and Restated Organizers Agreement (4)
<FN>
-----------------------------
(1) Incorporated by reference to exhibit of the same number filed with the Company's Registration Statement on Form SB-2, as
    amended, (File No. 333-91817)
(2) Incorporated by reference to exhibit 10(b) to the Company's to Registration Statement on Form SB-2, as amended)
    (File No. 333-91817)
(3) Incorporated by reference to exhibits 10(c) to the Company's to Registration Statement on Form SB-2, as amended)
    (File No. 333-91817)
(4) Incorporated by reference to Exhibits 99(b) and 99(d) to the Company's to Registration Statement on Form SB-2, as amended)
    (File No. 333-91817)
</FN>
</TABLE>

(3)       (B)  REPORTS ON FORM 8-K

         No reports on Form 8-K were filed during the fourth quarter of 2000.


                                       40
<PAGE>

                                   SIGNATURES

         In accordance  with Section 13 of the Securities  Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                       COMMERCEFIRST BANCORP, INC


March 20, 2001                         By:  /S/ Richard J. Morgan
                                           -------------------------------------
                                           Richard J. Morgan, President and CEO

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.


<TABLE>
<CAPTION>
           NAME                                         POSITION                                     DATE
<S>                                        <C>                                                   <C>

 /s/ Milton D. Jernigan II                 Chairman of the Board of Directors of the             March 20, 2001
-----------------------------                        Company and the Bank
Milton D. Jernigan II



 /s/ Alvin R. Maier                         Vice Chairman of the Board of Directors              March 20, 2001
-----------------------------               of the Company and the Bank; Secretary
Alvin R. Maier                                   and Treasurer of the Company



 /s/ Richard J. Morgan                        Director, President and CEO of the                 March 20, 2001
-----------------------------                        Company and the Bank
Richard J. Morgan


 /s/ Lamont Thomas                         Director and Executive Vice President of              March 20, 2001
-----------------------------                      the Company and the Bank
Lamont Thomas


 /s/ Edward B. Howlin, Jr.                   Director of the Company and the Bank                March 20, 2001
-----------------------------
Edward B. Howlin, Jr.
</TABLE>



                                       41